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Volume Is Important!
Why is Volume Important
for Market Timing?
When you look at a chart for a major market index such as the S&P 500, you
see only a history of the price paid for a basket of stocks. What you don't
see is the total volume for the entire
S&P 500 minute-by-minute or even day-by-day.
What you don't see can hurt you.
- A moving average of the volume should also
be taken into consideration. This is important because when the current
volume rises above a long-term volume moving average, this is potentially
a signal that there is increased market activity that will be affecting
the price. Thus, it is important to provide this indicator as an input.
- Volume technical analysis for
QQQQ timing (AMEX:
QQQQ), S&P 500 timing
(AMEX: SPY),
Dow Jones timing
(AMEX: DIA) based on the volume of all index constituents works
very well for index shifts timing.
- Volume is the indication of supply and demand.
It's defined as the number of units traded during a time period. This
number is significant in that it supports the prevailing price trend.
- Volume offers a complete picture of the market.
- Minute-by-minute trading volume shows the reversal
points of the market, and therefore when to buy and sell!
- Currently when a change in sentiment occurs on the
market, most people don’t find out until it is too late. This can be
costly to an investor. Trading volume offers investors an invaluable
tool to know when and where a change in sentiment is going to occur,
and act accordingly.
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