What you will learn
- Read the volume histogram under the chart
- Tell a move on volume from a move through empty space
- Spot a volume spike and a fading trend
- Know which volume data can be trusted and which cannot
Volume — how much of the asset actually traded
Price shows where the market is going. Volume shows how much traded: the number of units of the asset (shares, contracts, coins) bought and sold during a candle.
Important: volume is NOT the number of buyers and sellers. In any trade they're equal — someone bought exactly as much as someone else sold. Volume measures the size of the trading, not the number of participants.
A move on high volume is serious: there are many real trades behind it. On low volume it's often a dud that runs out of steam quickly.
Analogy. A shout across the square and a whisper in the ear — the words are the same, but the weight differs. Volume is the loudness of a move.
Break volume down into parts
The bars at the bottom of the chart are the volume under each candle. Tap all three points and open them to complete the step.
- Volume spike
- A tall bar — many trades went through
- Low volume
- A short bar — almost no interest
- Confirmation
- Momentum on volume — the move is trusted
This is an exercise from the lesson. You can run it on a live chart in the terminal, where progress is recorded.
Try it on the chartA spike confirms momentum
Look at the impulse candle in the center: price shoots up, and beneath it is the tallest bar of volume. The market is voting with money for this move.
On the calm candles to the right, volume drops — the move quiets down, consolidation sets in.
Exception — the climax. A sharp volume spike at the end of a long move is often not confirmation but exhaustion: a big player is unloading into the crowd. Then a reversal follows the peak, not a continuation. Volume confirms a move as it develops, not at the very extreme.
Strong or weak?
Price is rising, and volume on that rise is also rising. What kind of move is this?
This is an exercise from the lesson. You can run it on a live chart in the terminal, where progress is recorded.
Try it on the chartTap the volume spike
Find the tallest volume bar on the chart — it's at the bottom, under the impulse candle. Tap it.
Check off what you've learned
- I understand: volume is the size of trading, not the number of participants
- I tell a volume spike from a low one
- I know: a rise on volume is a strong signal
- I see momentum confirmed by volume
This is an exercise from the lesson. You can run it on a live chart in the terminal, where progress is recorded.
Try it on the chartWhy volume is read first
Every indicator calculates something from price: moving averages smooth it, oscillators measure its speed. Volume is the only thing that arrives from the market separately from price, which is why it can confirm or contradict what price showed. No other tool can do that — they all restate price in different words.
In practice it looks like this. A breakout on rising volume means participants stood behind the move: somebody genuinely repositioned. The same breakout on fading volume means there was simply nobody holding price, and a few candles later it comes back. The difference is visible in advance rather than in hindsight, and that is the whole value.
Spikes, fades and exhaustion
Three situations volume is watched for. A spike is a candle whose volume is several times its neighbours: the market reacted to something, and the level where that happened works as a reference afterwards. A fade is volume dropping candle by candle while the move continues: interest is running out and continuation is unlikely.
The third and most useful is climactic volume. Enormous volume at the extreme of a move, after which price goes no further. It means the last willing participants are in and there is nobody left to push. Reversals follow such candles noticeably more often than ordinary ones.
One important caveat: volume has no direction. The histogram shows how much traded, not who was more active. Delta and footprint answer that; plain volume answers only "a lot or a little".
Which volume can be trusted
On exchange-traded instruments — futures, stocks, crypto on a major venue — volume is real: the exchange counts every trade. That is the case where the numbers can be taken at face value.
On forex no consolidated volume exists: the market is decentralised, and the terminal shows tick volume — the number of price changes rather than the number of contracts. It correlates with real volume, but it is an estimate, not a fact. Usable, yes; proof, no.
The second source of distortion is time of day. Volume during the Asian session is lower by definition than during London, and comparing them directly is meaningless. The comparison that works is against the same hours on previous days.
Three mistakes with volume
First: treating high volume as a bullish signal. High volume means interest, not direction. It is just as high on a sharp sell-off as on a rally.
Second: looking at volume detached from levels. A spike in the middle of a range means almost nothing; the same spike at the range boundary or on a breakout means a great deal.
Third: comparing volume across instruments. Absolute numbers are not comparable — the only meaningful comparison is a candle against its own history.
Frequently asked questions
- What does volume show on a chart?
- How many trades went through during the candle. It does not show direction: volume is equally high on a strong rally and a strong sell-off. It answers "a lot or a little", not "which way".
- Is forex volume real?
- No, what is shown is tick volume — the number of price changes in the period. It correlates with real volume but remains an estimate. Real volume exists on exchange instruments: futures, stocks, crypto.
- What does a rise on low volume mean?
- That the move is not backed by participants: price drifted up from an absence of sellers rather than from active buying. Such moves return to their starting point more often than not.
- What is climactic volume?
- An abnormally large volume candle at the extreme of a move, after which price does not continue. It usually means the last willing participants have entered, and it often precedes a reversal.
Other lessons in this track
- EMAMoving averages 20/50/100/200 as trend support and resistance.
- RSIOverbought, oversold, and divergences.
- MACDMomentum and trend change from the histogram and lines.
- Structural MarkupRemove the noise and see the key peaks and troughs.
- FractalsLocal extremes by Bill Williams.
- Trading sessionsAsia · London · New York and their character.
- WeekendWhy weekends are dangerous: thin liquidity and gaps.
Terms covered
This material is educational and is not individual investment advice.