Securities is a popular financial investment field and attracts a lot of people today. The number of investment participants is increasing, but most of them are new investors and do not understand the issues related to securities. Especially the basic terms such as trading volume, stock index, liquidity,...So today, let's follow PHS to answer questions about trading volume in securities.

Trading volume in stocks?

What is trading volume?

Volume, if understood in English, is the volume, the pitch and low of the sound, but in securities this is a term that refers to the "trading volume" of securities products such as stocks, stock indices, bonds, etc. shares…Volume in securities means trading volume, which is the total number of shares actually traded (buying and selling) during a specified trading day or time period.

However, investors need to make a clear distinction between "trading volume" and "volume of shares" outstanding, which are two completely different terms. The outstanding volume is the number of shares listed and traded on the market by the stock exchange. The trading volume is the quantity of investors' buying and selling demand. The volume can be smaller than the listed volume or larger than the listed volume.

Trading volume example:

A stock can be traded back and forth many times, but the volume  – Volume is calculated on each trade. As 500 shares of A are bought, then sold, then bought back and then sold again resulting in four turns, the subscription volume is 2,000 shares, although the same 500 shares may have been issued. many times.

Meaning of Volume in Stocks

So when looking at the volume of transactions or looking at the data that Volume has, you can understand a lot of different problems, from that number you can imagine the market as well as the price of a stock. 

1. Expressing investor's need to buy and sell securities

Through the volume of Volume you can count over a period of time or after a certain trading session, you can see the needs of investors today. For example, with a stock with a high volume of trading, it shows that investors are very interested and expect to increase in price of that stock.

But if a certain stock has a rapidly increasing selling volume, while there is no buying, it is likely that investors are selling short, selling off stocks for some reason such as stocks falling. price, there is negative information about the company issuing shares.

2. Support to identify stock price trends

With Volume it also helps people determine the price trend, according to the law of supply and demand, if the supply is lower than the demand, the price will increase and vice versa. The same goes for securities, specifically stocks, if the demand for buying orders increases, the trading volume will increase, the share price will be pushed up accordingly.

In case the selling demand is high, the selling volume increases while the buying demand is not, the price will decrease for faster and better liquidity. Through trading volume we can visualize the price trend quickly.

3. Support potential valuation of a certain stock

Through the volume of trading Volume in a certain period of time, investors can rely on this factor to quickly value stocks.

Buying volume increases: When a stock is overvalued because investors are expecting an increase in its price, the assessment is based on information they get from news or the business provides.
Increased selling volume: When a stock is undervalued because investors are concerned about the stock being devalued.
Reading convention

How to read Volume in stock

To understand the stock volume, you can read on the charts or price tables, through the results of closing the trading volume (buying and selling) at the end of the session. Through order matching, selling surplus, buying surplus, you can have a basic picture of the trading volume of any stock during the day. You can easily read the Volume on the chart by the following ways

• Combine Volume with stock price, because it is two closely related factors:

- On the chart will appear the price moves in an extended range and the trading volume (buying and selling) is large.

- When the stock price is moving in a range, it suddenly changes to a new price, then the trading volume will increase accordingly. Investors should focus on selling or buying at this price because it will have high expectations.

• High volume and narrow price movement:

- When the price moving range is narrow but the volume is high, this may be the time when investors are buying accumulation. Investors will not fully follow price to increase or decrease trading volume.

How to use Volume effectively in stock trading

If you want to use the Volume factor effectively in stock trading, it needs to be combined with other factors to capture the trend of the market.

1. Combine Volume with Stock Price

As mentioned above, if you want to analyze stocks or stocks effectively, you must combine them with stock prices, because at different price points for different trading volumes, it can be a sudden increase or a sudden decrease. suddenly.

Case 1: Price goes before Volume

For the price to precede the volume, it means that many investors are trying to find a suitable entry point to take profit or stop loss. At a certain price which, according to the current situation, is favorable to the majority, then the buying or selling volume will increase.

Case 2: Price goes after Volume

Following an increase in the Volume of a certain stock is an increase or decrease in the price. Simply, when the volume of a certain stock increases unexpectedly, along with that, the share price also increases. Or when the volume of a certain stock decreases due to a sell-off, the price will drop quickly after that.

2. Volume analysis with related news

To be able to understand why there is a sudden change in volume, there is a break in buying and selling, you have to combine it with the news.

With a favorable news, good for the stock followed by an increase in volume and if with negative news, there will be an increase in selling volume immediately after. So based on that information you can determine how the Volume is, or based on the trading volume you can imagine many issues about the stock you are holding, should buy or sell will like. more suitable.

General conclusions

Thus, through the above sharing, you can clearly understand what trading volume in securities is and its basic meanings. Since this is one of the factors that have a strong impact on stock prices, it is essential for investors to understand clearly. If you want to participate in the stock market but don't know how to start, come to PHS right away. With a team of experienced stock market analysts, PHS will be a solid base for your financial investment path.