In trading, trade volume refers to the number of shares or contracts traded in a security or market during a given period. It is often measured on a daily basis, although it can also be calculated for longer or shorter time periods.
Trade volume is a measure of market activity and liquidity, with higher volumes indicating more activity and better liquidity. Volume can be used by traders to assess the strength and validity of a price move. For example, a price move on high volume would be considered more significant and potentially more sustainable than a similar move on low volume.
In the stock market, for instance, if a particular stock is traded heavily, it’s said to have high volume. Conversely, a stock is considered to have low volume if few shares are traded. High trade volume often means there’s significant investor interest in the stock, while low volume can indicate investor disinterest.
In summary, trade volume is a key metric in trading that represents the total number of shares or contracts traded during a specific time period, such as a day, month, or year. It is an important tool for traders in their analysis of market trends and activity.