What Is Volume in Stock Market? Meaning, Analysis & Examples

Volume is one of the most important yet underrated concepts in stock market trading. Many beginners focus only on price-whether a stock is going up or down-but smart traders always look at volume along with price. Why? Because price shows what is happening, while volume explains why it is happening.

In simple terms, volume in the stock market refers to the total number of shares or contracts traded during a specific period-for example, in one minute, one day, or one month. High volume means strong participation from traders and investors, while low volume indicates lack of interest or uncertainty.

At Trendy Traders Academy, volume is taught as a confirmation tool. Whether you are trading intraday, swing trading, or investing for the long term, understanding what is volume in stock market, volume analysis in stock market, how to calculate volume in stock market, volume meaning in stock market can significantly improve decision-making and reduce false trades.

What Is Volume Meaning in Stock Market?

Volume meaning in stock market is straightforward:

Volume = Total number of shares bought and sold in a given time period

If a stock trades 5 lakh shares in one day, its daily volume is 5 lakh.

Key points to remember:

Every buy has a sell, but volume counts each share traded
Volume is always shown as bars or histograms on charts
Volume changes reflect changes in trader interest

Volume is not about price value; it is about activity and participation.

Why Is Volume Important in Stock Market?

Volume meaning in stock market acts like the “fuel” of price movement. Without volume, price movements are unreliable.

Importance of Volume in Trading

Confirms trend strength
Validates breakouts and breakdowns
Helps identify reversals early
Filters false price movements

A simple rule followed by professional traders: “Price moves supported by volume are more reliable.”

How to Calculate Volume in Stock Market?

Many beginners ask: how to calculate volume in stock market? The answer is simple-you don’t calculate it manually.

How Volume Is Calculated

Stock exchanges automatically record every trade
Total traded shares = volume

For example:

Trader A buys 100 shares
Trader B buys 200 shares
Trader C buys 300 shares

Total Volume = 600 shares

This data is published live by exchanges like National Stock Exchange and Bombay Stock Exchange. On charting platforms (TradingView, Zerodha Kite, etc.), volume is displayed automatically below the price chart.

Types of Volume in Stock Market

Volume can be analysed in different ways depending on timeframe and trading style.

1. Daily Volume

Most commonly used
Shows total shares traded in one day

2. Intraday Volume

Used by day traders
Analysed on 1-min, 5-min, or 15-min charts

3. Average Volume

Average trading volume over last 10, 20, or 30 days
Helps compare current activity with normal activity

4. Delivery Volume (India-Specific)

Indicates how many shares are taken for delivery
High delivery percentage = investor interest

Volume Analysis in Stock Market: Core Concept

Volume analysis in stock market is the study of volume behaviour in relation to price. Volume alone means little. Volume + price tells a story.

Rising price + rising volume = strong uptrend
Rising price + falling volume = weak uptrend
Falling price + rising volume = strong downtrend
Falling price + falling volume = weak downtrend

These relationships help traders judge whether a move is genuine or misleading.

Volume and Trend Confirmation

Uptrend with Volume

If a stock is making higher highs and higher lows with increasing volume, it indicates strong bullish participation.

Weak Trend Warning

If price keeps rising but volume keeps decreasing, it signals:

Buyers are losing interest
Trend may slow down or reverse

This concept is widely used in swing and positional trading.

Volume and Breakouts: The Most Powerful Use Case

One of the best uses of volume is identifying breakouts.

What Is a Volume Breakout?

When a stock breaks a key resistance or support level with unusually high volume, it is called a volume breakout.

Why Does Volume Matters in Breakouts?

Confirms fresh demand or supply
Reduces chances of false breakout
Attracts institutional participation

A breakout without volume often fails.

Volume in Reversal Trading

Volume also helps identify trend reversals.

Climax Volume

Sudden spike in volume after a long trend
Indicates panic buying or selling
Often marks trend exhaustion

Example

Stock falls for weeks
One day, volume spikes sharply but price stops falling
Indicates sellers are exhausted

What Is Volume in Stock Market With Example?

Let’s understand what is volume in stock market with example.

Example 1: Bullish Confirmation

Stock trading at ₹500
Average volume: 1 lakh shares
Breaks ₹520 resistance with 5 lakh volume

Indicates strong buying interest and higher probability of continuation.

Example 2: False Move

Stock moves from ₹300 to ₹310
Volume is below average
Next day price falls back

Low volume failed to support the price move.

Volume vs Price: Which Is More Important?

Both are important, but they serve different purposes.

Aspect	Price	Volume
Shows	Market direction	Market strength
Can mislead alone	Yes	Less likely
Confirms trend	Partially	Strongly

Professional traders never analyse price without volume.

Popular Volume Indicators in Stock Market

Volume itself is raw data, but indicators make it easier to interpret.

1. Volume Bars

Most basic and widely used
Shows trading activity per candle

2. Volume Moving Average

Compares current volume with average volume
Helps spot unusual activity

3. On-Balance Volume (OBV)

Combines price direction and volume
Used to identify accumulation and distribution

4. Volume Oscillator

Shows difference between short-term and long-term volume

Volume Analysis in Intraday Trading

For intraday traders, volume analysis in stock market is critical.

How Day Traders Use Volume

High volume stocks are preferred
Confirms momentum entries
Avoids illiquid stocks

Intraday traders look for:

Opening volume spike
Breakout with volume
Volume expansion after consolidation

Volume in Swing and Positional Trading

Swing traders use volume on daily and weekly charts.

Breakout after long consolidation with volume
Rising volume during up-moves
Declining volume during pullbacks (healthy sign)

Long-term investors also use volume to identify accumulation zones.

Common Volume Mistakes Traders Make

Trading price patterns without volume
Ignoring volume divergence
Assuming high volume is always bullish
Trading low-volume stocks

Remember: Volume must be analysed in context.

Volume and Liquidity: Not the Same Thing

Many beginners confuse volume with liquidity.

Volume: Number of shares traded
Liquidity: Ease of buying/selling without affecting price

High-volume stocks are usually liquid, but not always.

Is High Volume Always Good?

Not necessarily.

High volume can mean:

Strong buying interest (bullish)
Panic selling (bearish)

Always check:

Where volume appears
In which trend
At what price level

Volume in Indian Stock Market Context

In India, volume data is especially useful because:

Retail + institutional participation is visible
Delivery data adds extra insight
F&O volume shows derivative activity

Stocks with rising price and rising delivery percentage often indicate long-term strength.

Conclusion

The stock market is run by volume. It shows the belief underlying any price movement and distinguishes between real trends and false ones. Ignoring volume is a trap that traders usually fall into such as false breakouts and weak reversals.

By knowing the real meaning of volume in the stock market and knowing the volume analysis in stock market, you have an advantage over most novices. Volume serves as a price action reality check regardless of whether you are intraday trading, swing trading or investing.

Volume is not viewed as an indicator at Trendy Traders Academy, but a language of the market. Know how to read it and the decisions that you make in trading will be more straightforward, relaxed and steady.

Also Read : What is India VIX? Meaning, Full Form, Calculator & Factors.