Volume Analysis

What is it?

Volume measures the number of shares traded. It is the single most important confirmation indicator. A price move on high volume (>1.5× average) has conviction. A move on low volume (<0.5× average) is likely to fail. Volume analysis compares current volume to the 20-day average to determine if moves are significant.

Why it matters

Volume (weight 1.2) is PRIMARY in AIShare. It acts as a truth serum for price action. Breakouts on 2×+ volume are reliable; breakouts on low volume are traps. Every signal is volume-weighted — even a perfect technical setup is penalized if volume is below average.

Key parameters

How to use

1. 1Compare current volume to 20-day average volume (volume ratio)
2. 2Volume ratio > 1.5× = High conviction move — trust the direction
3. 3Volume ratio > 2.0× = Significant institutional activity
4. 4Volume ratio < 0.5× = Low conviction — the move may reverse
5. 5Volume spike at support = Buyers stepping in aggressively
6. 6Declining volume in an uptrend = Trend losing steam

Signals (5)

Swing trading tips

• Only take breakout trades if volume is 1.5×+ average
• Volume dry-up (very low volume) often precedes big moves — watch closely
• Increasing volume with price = healthy trend; decreasing volume = warning
• Gap-ups on 2×+ volume are strong continuation signals

Common mistakes to avoid

• Ignoring volume entirely — price alone tells only half the story
• Not comparing to average — absolute volume numbers mean nothing
• Trading breakouts on low volume — most will fail

Video tutorials (3)

• Volume Trading Strategy — Complete Guide

  Trading Rush

• Volume Analysis — How Smart Money Trades

  Rayner Teo

• Volume Price Analysis for Beginners

  The Trading Channel

Third-party tutorials — linked for educational reference. AIShare is not affiliated with these creators.

Quick quiz — test your Volume knowledge

5 questions. Pass with 3 out of 5 for a completion badge.

1. 1Volume analysis in AIShare compares today's volume to…

   AYesterday's volume onlyBA 20-session averageCThe all-time highDMarket-cap

2. 2A volume ratio above 2.0× usually means…

   ANothing meaningfulBSignificant pressure / institutional activityCA guaranteed reversalDA data error

3. 3A very low volume ratio (< 0.5×) on a price move suggests…

   AStrong convictionBLack of conviction — the move may fadeCDefinitely a topDDefinitely a bottom

4. 4In a healthy uptrend, you generally want to see…

   ADeclining volumeBRising or stable above-average volume on up-daysCZero volumeDOnly weekend volume

5. 5Volume is best used as…

   AA standalone entry triggerBA confirmation layer on top of price and indicatorsCA long-term fundamental metricDA replacement for a stop loss

Educational self-assessment only — not a regulated qualification.