Volume is the number of shares traded in a stock during a given period, such as a day or a single candle on a chart. If 5 lakh shares change hands today, the day’s volume is 5 lakh.
Every trade has a buyer and a seller, so volume counts each share once, not twice. It tells you how active a stock is and how much interest there is behind a price move.
Traders read volume alongside price. A few common rules of thumb:
- Price rising on rising volume suggests genuine buying interest.
- Price rising on falling volume can mean the move is running out of steam.
- A breakout above resistance on volume well above average is taken more seriously than one on thin volume.
Example: a stock normally trades about 2 lakh shares a day. One day it breaks above ₹450, a level it failed at three times, and volume jumps to 9 lakh. That spike tells you a lot of participants agreed with the move.
One mistake: comparing raw volume between different stocks. A large-cap trading 50 lakh shares and a small-cap trading 50,000 can’t be compared directly. Compare a stock’s volume with its own average instead.
For a deeper look, read our post on the price-volume relationship. Volume analysis is also taught on live charts in our Diploma in Stock Market.