Lesson T1.5 · 5 of 6 · Technical analysis and reading a chart
Trading volume: what it shows and how to read it on a chart
Volume shows how many shares changed hands over a period. A price move on high volume has many participants behind it, so it is more convincing than one on low volume, though never guaranteed. High volume also means liquidity: you can buy and sell easily.
Terms in this lesson
- Trading volume
- How many shares were bought and sold in a day.
- Liquidity
- How easily you can buy or sell a stock, quickly and at a fair price.
- Bid-ask spread
- The gap between the price you can sell at and the price you can buy at, at the same moment.
Opening question
Two million of a company’s shares traded in one day. What does that mean?
Every trade has a buyer and a seller, so volume cannot tell you which side was bigger. The money goes from buyer to seller, not to the company.
It does not matter if you get it wrong: trying first helps you remember.
What trading volume shows
Definition
What is volume?
The number of shares traded over a period.
On a chart it sits below the price, one column for each candle. On a daily chart, the column shows how many shares traded that day; on a 5-minute chart, in those five minutes. Forex has no central exchange, so there is no central volume either: platforms usually show the number of price changes instead.
Apple’s daily chart over the last 30 trading days, with a volume column under each candle.
Myth or fact?
“High volume means there were more buyers than sellers.”
Myth. Every share bought was sold by someone. Volume shows how much traded; the price shows who was in more of a hurry. If the price rose, buyers were willing to pay up.
High volume on a price move: what it means
Dow theory held that volume confirms the trend. The idea is simple: a move that many people take part in is harder to reverse than one driven by a few.
Plenty of people were willing to pay more. A breakout from a range on high volume is more convincing.
Only a few pushed the price. The move can fizzle out quickly.
Lots of people sell at once, often out of fear. Sometimes it marks the end of a fall, sometimes only the start.
Spot the pattern
The price tries twice to break above the range. Tap the breakout that volume confirms.
The price moves sideways between about 48.5 and 52, then tries twice to climb above 52. Each day’s volume is shown below the chart.
Candle 23: the break above 52 comes on roughly three times the usual volume, and the price stays above. The first attempt, candle 15, had the lowest volume on the chart, and the price fell back into the range.
Check yourself
A share rises three days in a row, but volume falls each day. What does that tell you?
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Create a free account- Low volume
- Volume three times higher
The same chart, annotated. The first break above 52 has the lowest volume and the price falls back into the range. The second comes on about three times the usual volume, and the price then climbs towards 56.
Volume and a stock’s liquidity
Example
How much trades in a day?
Tens of millions of Apple shares change hands on a typical day.
Over the 20 sessions to 18 September 2026 the average was about 43.5 million shares a day, or roughly $14.6 billion changing hands every day. Some small companies trade only a few thousand shares a day. For an ordinary investor, Apple is effortless to buy and sell; with a thinly traded share, even a modest order can move the price.
Average of the 20 sessions to 18 September 2026, from MarketScreener.
Definition
How is volume linked to liquidity?
High volume means you can buy and sell easily, at a fair price.
Liquidity is how easily you get in and out of a position without moving the price. On a high-volume share, the gap between the buying and selling price, the bid-ask spread, is usually small. On a low-volume one, a single larger order can shift the price.
Work it out
A share trades 400,000 units a day at $25 each. How many dollars change hands a day, in millions?
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Create a free accountCheck yourself
You want to sell 50,000 shares in a company that usually trades 20,000 a day. What is the risk?
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Create a free accountWhat would you do?
You spot a small share that has risen 40% in a week on very low volume. What do you do?
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Create a free accountWhat you learned
- Volume shows how many shares traded, not whether buyers outnumbered sellers.
- A move on high volume is more convincing than one on low volume, but not guaranteed.
- High volume brings liquidity: easy to get in and out, with a small spread.
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Save your progress with a free accountLessons are educational. They are not a recommendation to buy or sell. Investing involves risk and you can lose money. Sources: StockCharts ChartSchool (Dow theory and the role of volume); Apple’s average volume over the 20 sessions to 18 September 2026, from MarketScreener (AAPL quotes page). The Apple chart uses einvestitii.ro market data, updated daily. The range breakout chart is a teaching diagram.