Hexun Investment Advisor Liu Weiqi: How to Understand Trading Volume When Stock Trading — Remember These Points!

It is commonly said that understanding trading volume is key. Trading volume is water, and stock prices are boats. Remember the following points:

First, during a breakout—especially when breaking out of a previous consolidation platform—there must be an increase in volume, and there should be a sufficient turnover process. This way, the subsequent pressure will be relatively small, making it easier to experience a volume-decreasing upward trend, which can often continue.

Second, after breaking through significant consolidation platforms or resistance zones, if there is an increase in volume during an upward trend, then the upward trend can still rise; if there is a volume increase but the upward trend is stalling, then it’s necessary to observe carefully; if there is a volume increase but the price remains stagnant, it may even be time to consider exiting.

Moreover, if a breakout occurs without accompanying trading volume, meaning the breakout seems relatively easy, it often does not signify a real stronghold, and the likelihood of it not holding is greater, with a pullback being a high probability event.

Finally, if the stock price is in a bearish trend and there is a strong upward candle with increased volume, it is often a trap for bulls, usually unable to sustain itself, and further declines are likely, so caution is advised.

These four points are the key to trading volume.

(Author: Zhang Yan)

     【Disclaimer】This article only represents the author's personal views and has nothing to do with Hexun.com. Hexun.com maintains neutrality regarding the statements and opinions in the text and does not provide any explicit or implicit guarantees regarding the accuracy, reliability, or completeness of the content. Readers are advised to consider it for reference only and assume all responsibility. Email: news_center@staff.hexun.com

Report