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Beginning Investors Forum > Large volume increase what does it mean?
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jarbearsdad

Member since: Jul 08

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I am watching glcc.pk its average volume is like 165,000 and yesterday it was almost 3 million and today its over 16 million already and its not even lunch time. but the price remains the same what gives? what does this mean?
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Xlthos

Member since: Jun 08

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I'm using free charting service a this point so I can't get a good chart...

But, I recently read that volume is second only to price. Some chart services use volume-moving averages as one of the built in indictors.  One theory is, if a stock goes up on declining volume it is running out of steam or it is bearish. If it goes down on lightening volume, that is considered somewhat bullish. If volume increases on the way up, that is good. The inverse opposites are also true.  Finally, if the price stays the same on heavy volume the bulls and the bears are slugging it out and no one is wining. I suppose that could be interpreted as a lack of leadership.

Here is some of what investopedia.com says on volume: When average daily trading volume increases or decreases dramatically, this is a signal that there has been some news released that has affected people's views on the security. Usually, higher average daily trading volumes mean that the security is more competitive, has narrower spreads and is typically less volatile. Stocks are less volatile when they have higher average daily trading volumes because much larger trades would have to be made to have an effect on the price.

Maybe in your case, some news was released that could be interprets good or bad, depending on opinion, and it caused a lot of people to react, but not necessarily in sync with each other.  

I hope this helps some, and will draw some more experienced perspective into the discussion.

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Veneratio

Member since: Jul 08

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Volume is merely an economic function model of supply and demand. Supply is fixed(in this instance as in most) thus leaving the only variable as demand. Supply being fixed, any shift in demand will result in a shift of the price. Volume is a non biased indicator of demand and if the demand is changing but the price is not, there is only one solution which Xlthos already stated, demand to buy and demand to sell are equal, thus leaving cancelling out resulting in a non shift in demand, which means the price will not fluctuate.

 

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