Description:
Trading volume is a critical indicator of market activity that is closely monitored by traders and investors alike. Understanding trading volume can provide valuable insights into market trends, investor sentiment, and potential trading opportunities.
Input Parameters:
- MA Length: Number of periods used in the calculation.
- MA Type: Select the moving average type such as EMA, SMA, or HullMA.
Use Case:
- Support and Resistance Levels: Support and resistance levels are key price levels where a stock tends to either bounce or break through. By analyzing trading volume at these key levels, traders can determine whether there is enough buying or selling pressure to break through a level. Higher trading volume at a support or resistance level can indicate that it is more likely to hold or break.
- Breakouts and Breakdowns: Breakout and breakdown trading strategies use trading volume to identify potential price movements outside of a security’s current trading range. When a security’s price breaks through a key level, such as a resistance level, with high trading volume, it can signal a potential breakout or trend reversal. Conversely, if a security’s price falls through a key support level with high trading volume, it can signal a potential breakdown or downtrend.
- Divergences: Volume divergence is a trading strategy that compares changes in price with changes in trading volume. If the price of a security is rising but the trading volume is decreasing, it may indicate that the trend is losing momentum and a reversal could be imminent. Conversely, if the price is falling but trading volume is increasing, it may indicate that a trend reversal or breakout is coming.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.