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Volume

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Most bad traders overlook volume, they think it's too basic for them.
They are failures, for a reason.
Volume is a staple indicator.

“If candles are pastas, volume is butter.”

Volume presentation

Volume is the number of transactions executed for a given candle.
The exact value is not useful.
Volume bars serve a purpose only by checking their visual size in relativity with other bars.

Different software use different color codes for volume.
For now, ignore their colors.

Effort and result

Volume is the effort behind a move.
Price candles are the result.

Volume = Effort
Price = Result

Predicting a change in market's character with volume

On this example we see a rising effort (rising volume).
The price follows the effort, until we hit the bar marked by the exclamation point.
Note how the effort is the strongest, however the result is barely here:

Bulls (demand) need a higher effort for lower result: this means bears (supply) entered the game.

It doesn't mean bears will inevitably overcome their opponent. It means you have to be careful: the uptrend paused and is followed by sideway price action. Will it resume up or down? The answer is worthy!

Predicting a trend reversal with volume

Here you see a falling price with increasing volume.

The marked volume bar is crazy big! We have a really strong effort here.
However, the result (bearish price) isn't growing, see how the candle isn't really tall. Plus it has a noticeable bottom-wick, a sign of buying pressure.

Bulls are fighting back.
The next candle forms a bullish engulfing pattern: an uptrend is born.

Volume cheat sheet

In this table, by CH, we mean the heigh of a price candle.

increasing candle size in bullish marketincreasing candle size in bearish market Increasing CH Little resistance to the trend
Decreasing candle size in bullish marketDecreasing candle size in bearish market Decreasing CH Some resistance to the trend
Increasing volume and its signification Increasing volume

In a bull market
Increasing CH: Increasing power of the uptrend
Decreasing CH: Emergence of a counter-trend.

In a bear market
Increasing CH: Increasing power of the downtrend
Decreasing CH: Emergence of a counter-trend.

Decreasing volume and its signification Decreasing volume

In a bull market
Increasing CH: Little effort is needed to advance, due to lack of supply. However low volume is also an indication of low demand (since the supply is nearly 0, it still advances), it is sensitive to increase of supply.
Decreasing CH: Decrasing demand, vulnerable to a reversal.

In a bear market
Increasing CH: Little effort is needed to drop, due to lack of demand. However low volume is also an indication of low supply (since the demand is nearly 0, it still advances), it is sensitive to increase of demand.
Decreasing CH: Decreasing supply, vulnerable to a reversal.

Heavy volume Heavy volume

In a bull market
Coming of supply. Conceivably on the way of being absorbed by buyers (or not).

In a bear market
Coming of demand. Conceivably on the way of being absorbed by sellers (or not).

Massive volume Massive volume Sudden and colossal volume is usually short-lived and price's jerk-like movement gets rapidly corrected.

Conclusion

Volume is a very important indicator.
Read the cheatsheet again and again until you integrate the notions it presents.

Play with your chart and read volumes.

PS: If you don't want the volume to be overlayed by the price:

Creating a panel for volume on tradingview

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  Candle patternsSupport and resistance