Why volume matters
Price says what happened; volume says how many people meant it.
Price is one dimension of the tape. Volume is the other: how much actually traded at those prices. A move on heavy volume is a statement backed by real participation; the same move on thin volume is a rumor — price drifting through an empty book that any real order can reverse.
Confirmation and divergence
- Confirmation — trend advancing on expanding volume, pullbacks on shrinking volume. Participation flows with the move: the healthiest pattern a trend can show.
- Divergence — new price extremes on declining volume. The move continues but conviction is leaving; fewer traders are willing to pay the new prices. This is the early fuel-gauge warning of exhaustion.
Volume is only meaningful relatively
Ten million shares is heavy for one ticker and dead quiet for another — and the open always dwarfs lunch. Judge volume against its own baseline: this candle versus the recent candles, today versus an average day, this session hour versus the same hour normally. Relative volume (RVOL) formalizes it, and it is the first thing to check when a ticker shows up on a scanner: is anyone actually here today?
The second opinion
Volume is on every chart one toggle away, and it asks one question of every price move you are about to trust: who showed up for this? Candles plus volume reads the tape in two dimensions; candles alone is half the picture.