Volume Basics
Price tells you what happened. Volume tells you how much conviction was behind it.
What Is Volume?
Volume measures the number of shares, contracts, or coins traded during a period. Each candle on your chart has a corresponding volume bar beneath it.
- High volume = high participation — more traders agree on the move
- Low volume = low conviction — the move may not sustain
Volume Confirms Price
The golden rule: volume should increase in the direction of the trend.
In an Uptrend
- Volume rises on green candles (buying pressure)
- Volume falls on red candles (light profit-taking)
In a Downtrend
- Volume rises on red candles (selling pressure)
- Volume falls on green candles (weak relief rallies)
Key Volume Patterns
1. Breakout Confirmation
A breakout above resistance with high volume is far more reliable than one on thin volume. Low-volume breakouts often become fakeouts.
2. Volume Climax
A sudden massive spike in volume after an extended trend often marks exhaustion. The last wave of emotional buyers or sellers entering before a reversal.
3. Volume Dry-Up
When volume shrinks to very low levels, it often precedes a big move. Think of it as the market coiling before a spring release.
Volume in Crypto vs Stocks
- Stocks: Volume is centralized and reliable (exchange-reported)
- Crypto: Volume can be fragmented across exchanges, and wash trading can inflate numbers. Focus on relative volume (compared to the asset's own average) rather than absolute numbers.
Key Takeaway
Never trust a move that isn't backed by volume. Price without volume is just a rumor — volume is the confirmation.