When trading volume is active, technical analysts figure they can trust the price movement to a greater degree. For instance, imagine a stock that soars to break into new high ground, but on low trading volume. A technical analyst would be skeptical of the move higher, because a relatively small group of investors powered it. Similarly, if trading volume is heavy, that tells the technical analyst there's a great deal of volume, or conviction, behind the trade.
This table summarizes the way a fundamental analyst might couple reading volume with price movements.
|If a stock . . .
|. . . and trading volume is . . .
|Technical analysts are . . .
Using MSN Money's site, you can obtain a stock's daily and average daily volume following these steps:
- Log into MSN Money at money.msn.com.
- Enter the stock's symbol in the blank and click the name of the company when it appears.
- Read and interpret the volume.