What is Volume?Volume is a Technical Analysis tool. It measures the number of shares a given stock has traded. You can run graphs on volume to read daily, weekly, monthly and years. Volume can be helpful to confirm breakouts. Let us take a look at the graph below.
The bars on the bottom represent Volume. As we can see, the stock broke out of its resistance. The stock is currently trading Bullish. It is also confirmed by the fact that the Volume was higher on the breakout day. This is normally a good time to get into a Call or a Bull Put Spread as the stock is likely to keep trending upward. If the stock broke out on low volume you may not want to enter it, as it could easily come back down and continue bouncing between support and resistance. If it does break out on low volume it is normally a good idea to give it 1 more day to receive confirmation. If it goes up the next day it may be a good entry signal.
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