i dont get this many sources say to look at the volume and chart but when i look at the volume it doesnt seem to work at all sometimes i see volume spike massively and stock barely move in price other times i see wild chart moves and almost no volume change other times i see volume move with stock price can anyone explain how it works? im not getting it how can stock move without volume and volume spike without price movement to match it
Stocks can move without volume because there is no balance between supply and demand. You will get a volume spike on triple witching days and broker crosses between institutions.
When volume spikes on ES, short it. But watch out, it can reverse on you fast, like the boy from Ipanema. Growllll!
sometimes i see volume spike massively and stock barely move in price - it happens. It might happen again other times i see wild chart moves and almost no volume change - don't trade illiquid stocks other times i see volume move with stock price - it happens. It might happen again When there is a significant increase in volume, that indicates interest. So pay attention to that stock
Volume is HIGHLY overrated and really does nothing in terms of determining or confirming or denying a trend in contrary to what pretty much all of the technical analysis material claims. When you have a large price move, 99% of the time it will be accompanied by heavy or at least a spike in volume. It's a chicken-and-egg effect. It's because of the heavy volume of large number of people transacting that price went one way or another but that in no circumstances confirm with any certainty that there would be a trend in the direction of the price movement or how strong or weak that trend is. If there happened to be, it's purely coincidental and is really not reliable. Mho. I trade with a chart with volume removed; it gives me more space to put more useful indicators on or simply see the PA better and it's been serving me well.
You seem to miss a basic understanding of how markets operate and what (not why) causes prices to move up or down or stay in balance. Read this: price movement Basically, a market moves when there's not sufficient liquidity (limit orders) at a given price level to complete a given market order. Keep in mind that market orders cross with limit orders. For example, if I want to sell a huge amount of stocks at market, I'm essentially saying I'm willing to sell it for whatever price I can get. Just get me the hell out...Basically, two things can happen: 1) I dump this order at the market and if it's a very thin market (low liquidity and no/few limit orders at or below market) it will eat up all available liquidity (limit buy orders below the market) until my order is filled. This may cause the market to tank if the order is big enough and no buyers (limit orders) are willing to take the other side. 2) I dump this order at the market and there's "unlimited" liquidity at the best bid. My market order is immediately filled and nothing happens with the market price - even if this volume is way above average volume and will cause a huge spike in volume. Remember that the central limit order book (DOM) shows resting limit orders. The best bid/offer in a market shows what prices are available for you to trade on right now. These are orders resting in the market and they exist without volume, i.e., they are prices untraded. If, these limit orders cross with a market order it becomes volume on your charts. However, these limit orders can be pulled instantaneously if someone for some reason decides they do not want to offer liquidity at said level. That's why a market can be quoted at 10/11, but suddenly something happens and everyone pulls their limit orders and the new best bid/ask is 20/21. Price just did a huge jump without any volume transacted. Hopefully that makes sense. If not, ask...
Best you post some of the charts you were looking at with the questionable volume because volume on one day there's news for the stock will be different than volume on another day in a different type of price action. Without the charts and if this thread lasts a few weeks...you're going to get a ton of different answers by traders not even trading what you're trading. Hopefully those sources you refer to that told you about volume...they didn't do the same thing as in explain volume without charts. wrbtrader
Like what wrbtrader posted. Post a screengrab of what you are watching. Otherwise it's just playing a guessing game.
There are also orders sitting on Broker servers that are not on the Exchange servers, only to become "live" on the Exchange after some condition is met. Iceberg, Hidden, Market or Limit if Touched are examples. These can also fill at the current price action and absorb any liquidity needs. Computers... They do the darn-est things.
I don't ever take volume seriously, a volume spike can happen at any time, even if it's in the middle of a trend. When I see a cluster of volume spikes it tells me there is a lot of demand or supply at those levels. Usually when volume shrinks during a down or uptrend it means interest in the asset is being lost and the trend is due for a reversal, but this isn't always the case. I use volume just to confirm what is already on the charts, not to tell me what the chart is going to do.