Volume Charts

Volume Charts

Volume charts are based solely on the number of shares or volume that is being traded. These bars may provide even more insight into market action because they represent the actual numbers that are being traded. Similar to tick charts, we can examine how fast a market is moving by noting how many (and how quickly) bars are printing.

For example, one bar will print after every 1,000 shares have traded on a 1,000-volume chart, regardless of the size of the transactions. In other words, one bar might comprise several smaller transactions or one larger transaction. Either way, a new bar begins to print as soon as 1,000 shares have traded.

Fig 2: Volume Interval Chart

It should be noted that volume intervals are relative to the trading symbol and markets that are being analyzed. The volume interval will relate to shares when applied to stocks or exchange-traded funds (ETFs), contracts when applied to the futures/commodities markets and lot sizes when used with forex. Volume intervals are often scaled to the characteristics of an individual symbol because securities that trade higher volume require a larger interval to provide relevant charting analysis. Common intervals for volume charts include larger numbers (such as 500, 1,000, 2,000) as well as larger Fibonacci intervals (such as 987, 1,597, 2,584, etc).

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