Volume is most of the times is not looked at as its bit complicated to make sense of this information. Various people have tried different ways, they work some times and at times they just confuse. This blog tries to help the reader to make most sense of this vital information.
This is part of free certification course on this site and I am making this open as I thought it will be useful to everyone.
The very basic analogy used is any move with high volume is strong move and that with low volume is a weak move.
Volume tells the strength of buyers or Sellers
- If Market goes directional with high volume – considered as strong buying/Selling
- If price moves with low volume – consider it to be weak buying/Selling
- Remember – For every buyer there is a seller and for every seller there is a buyer!!!
But if you study any chart, you will find ample examples where it will not work.
1. If today’s closing price is higher than yesterday’s closing price, then: Current OBV = Previous OBV + today’s volume
2. If today’s closing price is lower than yesterday’s closing price, then: Current OBV = Previous OBV – today’s volume
3. If today’s closing price equals yesterday’s closing price, then: Current OBV = Previous OBV
Accumulation Distributiion Line
1. Money Flow Multiplier = [(Close – Low) – (High – Close)] /(High – Low)
2. Money Flow Volume = Money Flow Multiplier x Volume for the Period
3. ADL = Previous ADL + Current Period’s Money Flow Volume
Volume Oscillator
Difference between 2 Moving Averages (9-18) or (14-24)
Peaks recommend top or bottom.
Below zero line for long indicates sideways market (could also be accumulation)
VWAP – Volume weighted Average Price
Daily Volume @ Price levels
VERY PRECISE WITHOUT ANY TECHNICAL JARGON. I AM VERY MUCH INTERESTED IN PURSUING THE FREE CERTIFICATION COURSE. PLEASE PROVIDE ME A CLEAR ROADMAP. WITH BEST WISHES. APU CHOWDHURY
Thanks…
You may register for the free courses at https://learn2invest.in/available-courses/
These courses are being made while you would be taking them, as soon as these are done making I would be starting with new courses. Idea is to complete end to end basics of stock markets in about a year