What Is Trading Volume?
Volume is the quantity of an asset that is trading over a specific time period. It can be measured in shares, contracts, or any other measurement relative to the asset being traded. Trading volume takes into account the total number of buys and sales of the asset under consideration.
When an asset is more actively traded, its volume is higher. When an asset is less actively traded, its volume is lower. Volume is rarely (if ever) consistent over different periods of time, with most assets seeing mixed intervals of higher and lower activity.
Mathematically, total volume is a product of the number of trades multiplied by the average size of each trade. This means that trading volume increases with both more trades and larger trades.
Traders examine volume as part of their technical analysis in an attempt to assign probabilities to different price action outcomes.
Of course, volume analysis is not a silver bullet.
It must be understood correctly and put into context.