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Indicators based on volume: Volume
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There is no computing for the volume as such, just a standard way to plot it. Volumes are represented by vertical lines (as we can see on the graph).

Interpretation

There is two kind of volume series available: number of shares or cash equivalent exchanged. The first one is generally considered better because more stable (the second one is influenced by the stock price).

Volume is important because it gives you an idea of the liquidity of the paper. If a share has a very low volume, it will be difficult to sale or purchase it without influencing the price.

But first of all volumes are used to confirm a trend or a signal given by other indicators. With this indicator we look if a major price fluctuation goes together with an increased volume. Derived from this assumption, the OBV indicator has been developed.

Graph Example: Volume

The volumes are plotted on the lower part of the graph.