Good price levels attract great volumes. Is it a good idea to analyse purely based on Volumes? Any suggestions


I'm not sure, but I would like to share a perspective. 

When GEICO (US based Auto Insurance company) fell to $2 per share all the way from $30 per share....everyone on the street were disgusted with the stock and nobody wanted to even touch it. However Warren Buffet picked it up at $2...which eventually turned out to be a huge multi bagger for him. So the price was right..and the volumes were created by him.

Recently (few weeks back) HT Media  was trading at 71 - 72...near its all time low price...hardly anyone willing to buy it, the stock was trading at very low volumes..but Rakesh Junjunwalala decided to pick it up at 71/72. He spotted the price and he created the volume! Suggest you pull up the chart of HT Media and notice the volumes.

So one thing is clear...good price leads to good volumes.

However this does not mean.. as and when you see volumes building up you have a case to trade. If you dont have the right strategy, time and patience to wait for the trade to evolve you may burn out..even after spotting the right trade. 

So my suggestion do keep an eye on volumes, but sharpen your strategy around it to be profitable.  

Happy Profitable Trading!


Trading purely based on volumes might work for sure if you use the right indicators. But it depends on what you are trading cause some indicators work for some scrips/sectors/segments but not for others so you need to back test well.

Some of the volume based indicators are OBV, chalkin money flow, volume oscillator etc. Though I’m not much into technical analysis - based on web review I can say that OBV - on balance volume is widely used.

While analyzing a scrip its good to check the support/resistance, convergence/divergence and accumulation/distribution + fundamentals and other market events before investing or trading. Support/resistance will be present in the charting tool - use MACD for convergence/divergence and use OBV for accumulation/distribution. For intraday trading you might want to follow a technical strategy but for swing trading or investing, this will give you a macro view.

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Its the OPERATORS who move the market and they are known as FIIS  in India. Now how are they going to move the market up / down,,,, that is through  money in and out , Money in.. means buying  and money out means selling out,,, So more in more  pos volume and more out is more negative volume,, SO its the volume which tells where the price will go further in futture.

An  eod  fine analysis should be done with the help of volume / price and oversold abd overbought indicators. Seeing price behaviour and volume movemnet is not so easy to know whats going on,

some factors should  be taken into acocunt when we are judging through price and volume

1..close    2 spread of the bar   3 high    4 volume wether on selling or on buying side   5 volume above average or below    6  support and resistance collected from past      7  any of the good oversold and overbought indicator 

 . Every bar can be analysed  thorugh vokume but it will be useless . So better to study volume on large TF. I am attaching a chart here with VSA analysis.. see every bar bar speaks something after taking ivolume into account


Price is the advertising mechanism of opportunity in market. Volume is the result of this advertisement. Volume and price together makes sense in analysis.


Trading decisions should be based on price levels alone. Volume can be used as a supporting factor, however, decision should not be based on volume.


If you have a short question, it is best to ask in the main question box itself, it will save the time and effort to click on your question to read what it is.

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changes done :slight_smile:

Put very nicely Ed