How To Find High Volume Stocks: Volume is an indicator that points to the total number of shares being bought or sold in a specific time period or during the trading day. Trading volume helps several investors to examine the trends and patterns in the share market. The information about trading volume is easily accessible and can be found anywhere.
Along with stock price action, volume can be one of the most important technical parameters to determine where a particular stock is heading. Overall market activity in security is reflected in trading volume, indicating investors’ interest. This indicator also helps in perceiving an asset at a given point in time. Trading volume is one of the most closely-watched indicators.
Simply put, the trading volume also means the total number of shares on which action (buy or sell) has been taken. Therefore, stocks that are actively traded in the stock market have high trading volumes. On the contrary, if the stocks are thinly traded, the trading volume will be low.
Trading volume can be determined for a range of financial instruments such as derivatives stocks, bonds, and all kinds of commodities. These volumes are published by the stock exchange for each trading session in the stock market.
It is always advisable to trade or invest in those stocks which have higher trading volume. This article will explain How To Find High Volume Stocks listed in the Indian stock market.
Trading Volume- What Does it Show?
Before explaining how to find high-volume stocks in the Indian stock market, let us first understand what it shows.
The stock volume shows how active a particular share is. Thus, all activities are recorded in the volume metric, whether an investor buys or sells. If there is a huge volume of a particular stock, it means there is high interest in this stock. Whenever there is some news about the stock, the trading volume goes up.
This news can be negative too. If there is no relationship between trading volume and stock price, this points to weakness in an ongoing trend. Therefore, traders can expect a trend reversal. During uptrends and in a sideways market, the share prices can run into a resistance level and hold there.
Volume in the stock market informs about liquidity and market activity. Liquidity means how quickly an investor can get their money back when he/she punches the sell order. When there is a high volume in a particular stock, it simply means there are more sellers and buyers.
Trading volumes have a huge impact on the stock price. Trading volume is a strong and reliable technical indicator, representing the overall market sentiment around particular security or the market. Traders use trading volume for confirmation of the existence, or continuation of a trend or trend reversal. Trading volume can fluctuate significantly in a short period of time.
Trading volume can change significantly from a few thousand to lakhs on one particular day. To get a fair idea, traders can consider using the average, for example, the 20-day average.
How To Find High Volume Stocks
Knowing which stocks are most actively traded can provide investors with data and information about their liquidity, insights into market sentiment, and how likely a price rise or fall will stick. There are several financial websites that offer information about the most active stocks.
1. Price movement
Price movement is more important in comparison to the trading volume. A surge in the stock price should always be accompanied by a surge in the trading volume. If that’s not the case, you may want to avoid taking positions in them. Investors need to remember that volume validates the price movement. A significant rise in the stock price should be accompanied by an equally large increase in volume.
2. Visit financial websites, newspapers, etc.
One of the most overlooked technical parameters is volume. In trading, beginners are unaware of the benefits of the trading volume. It is very important to include it in your preparation. Knowing what the investors are trading is important to understand. This will give an idea about the stocks which are in play and which can make big moves.
The data on the volume of a share is readily and widely available on the charts or trading screens. Almost all financial sites have data on volumes. Volume might not be an attractive piece of information, but traders should combine the volume data with resistance and support levels. This can help them in getting a clear picture.
All the stock market exchanges track volumes. Traders can look at exchanges or news websites. Some platforms also use candlestick charts to give an idea of volumes for a particular time frame. These platforms can easily help you learn how to find high-volume stocks.
3. Using screeners of various investment platforms
Some investment platforms provide access to their screeners which smoothens the way to understand trading volumes. There are volume charts depending on the time period. There can be hourly volume charts, daily charts, monthly charts, etc. For each day, traders are required to look at the bottom of the chart. There will be vertical bars. Just by looking at the height of the daily bars, traders can have a fair idea about the stock’s trading volume.
4. Tracking of news and daily updates
Traders are required to keep themselves updated about the news related to a particular stock. Stocks that are in the news tend to have higher trading volume. This means that a lot of discussions are happening around that stock and individuals are exiting or entering the stock.
How Do You Know If A Stock Has High Volume Or Low Volume?
Based on the trading activities, a stock can a distinguished as high-volume or low-volume stock. While high-volume stocks are highly traded, low-volume stock is not traded much.
One way to know if a stock has high volume or low volume is by seeing its volume. If the volume of the stock is above 500,000 per day, it can be considered a high-volume stock and the stock with lesser than 500,000 can be considered a stock with low volume
To Sum Up
Analysis of trading volume is beneficial for traders and investors. Several long-term investors prefer stocks having higher trading volumes. Intraday traders too look for the stocks having higher liquidity as they have to square off their positions in a much shorter duration of time. We hope this blog gave you a brief idea of How To Find High Volume Stocks Listed In The Indian Stock Market.
Understanding the trading volume and its relation to current stock price movements can help investors and traders in judging the significance of trends. Sometimes with the help of this data they can even forecast future movements. This piece of information, when added to technical and fundamental analysis data, can give a complete picture of the stock, and help traders in making informed and wise investment decisions.
The abundance of financial websites makes the data related to trading volume easily accessible to traders.
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