The most significant rule is this: volume precedes price. Generally, before a stock price moves, the volume comes into play. This is explained in detail in the next section. Price & Volume Trends can be together used to confirm the strength of price movement.

Does volume always precede price?

The most important rule is this: volume precedes price. Typically, before a stock price moves, volume comes into play. ... In general, a price change on relatively low volume for a particular stock suggests an aberration, whereas a price change on high volume portends a genuine trend reversal.

How is volume related to price?

It is important to look at the relationship between volume and price. A price move, up or down, that is on higher volume is more significant. ... An increasing price is typically coupled with increased volume, but the price can decrease without an increase in volume if investors lose interest in the issue.