Australian (ASX) Stock Market Forum

Volume query

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:confused: I know this is probably a dumb question.....but here goes

When looking at the days trading for any particular stock and it quotes a quantity for volume...how can you tell if it's purchases or sales....
thanks :confused:
 
It is purchases.

Actually, no, it's sales.

Hang on a minute, it could be purchases.

Actually, it's both!

Think about it this way. If it purchases are 1,000,000 and sales are 2,000,000. Who is the other 1,000,000 being sold to???

Did I just blow your mind, was it one of those 'if a tree falls over in the forest with nobody around... moments?

Nah seriously, good luck with the trading and remember the one key lesson...always listen to Baglimit!
 
thanks for that ...I'm still not 100%, but I suppose time and experience will heal my confusion
why listen to baglimit...experience???
 
For someone to be buying there has to be a seller and vice versa. So if 200,000 shares were traded on a given day then 200,000 were sold and 200,000 were bought.

To put that another way, 200,000 shares have changed ownership. There must be two sides, both buy and sell, for every transaction. Just like for you to buy a loaf of bread, someone has to sell it. Two sides to the transaction but it's only one loaf of bread and would count as 1 on a volume chart.

It is possible that the 200,000 shares were sold by 50 different shareholders and 1 person bought the lot etc. Such an extreme situation with only one person buying on a given day would be unlikely to happen with very actively traded blue chip stocks such as BHP or TLS (Telstra) but will happen from time to time with less active stocks such a small mineral explorers where few shares change hands each day.

No such thing as dumb questions in my opinion. Always better to ask, that's what ASF is for... :D
 
thanks for that Smurf , totally understand now...I've been on the forum for less than a week and have picked up on some valuable education...

son of..you're kind of stuck on CEO - whats your thoughts...apart from what i've read in the previous threads ...
 
Smurf1976 said:
For someone to be buying there has to be a seller and vice versa. So if 200,000 shares were traded on a given day then 200,000 were sold and 200,000 were bought.

To put that another way, 200,000 shares have changed ownership. There must be two sides, both buy and sell, for every transaction. Just like for you to buy a loaf of bread, someone has to sell it. Two sides to the transaction but it's only one loaf of bread and would count as 1 on a volume chart.

It is possible that the 200,000 shares were sold by 50 different shareholders and 1 person bought the lot etc. Such an extreme situation with only one person buying on a given day would be unlikely to happen with very actively traded blue chip stocks such as BHP or TLS (Telstra) but will happen from time to time with less active stocks such a small mineral explorers where few shares change hands each day.

No such thing as dumb questions in my opinion. Always better to ask, that's what ASF is for... :D

Who is doing the buying or selling though? That`s what needs to be determined. If uninformed investors are buying when sophisticated investors are selling.......
 
All volume prints are transactions between buyers and sellers. Yes, for every buyer there must be a seller. However, in order to assess volume correctly you must look at the impact on the "efforts" of either the buyers or the sellers. If sellers are desperate then they will tend to sell at lower prices, thereby causing prices to decline. If buyers are keen tehy'll tend to pay higher prices, therefore driving prices higher.

Forget who is buying and selling. It does not matter and its also impossible to determine. As an example, there is a lot of emphasis on Director transactions. This is a pointless exercise. Firstly many Directors are career employee's who simply add stock as part of their super fund. They are taking a 10 to 20 year retirement positions. Yes they have faith in the company which is why they are buying, but their transaction size and time frame make it a useless indicator. That said, when a single Director has the vast majority of stock, such as SRV, then you take notice but these are rare. Just because Alan Moss buys $200k worth of MBL will have zero bearing on the immediate future direction of the stock.

You can add as many Mum's and Dad's to the equation as well but they are insiginificant in the context of direction, unless the stock is highly illiquid.

Look for area's of large volume and note what impact the volume has on the prices. Is there high volume with the close being near the high of the day? This means buyers. If its high volume with a low close, then it means sellers. Tight ranges with high volume is important, as well as many other facets, so reading volume correctly is very important.

There have been a few threads herein that show examples. A recent on is:

www.aussiestockforums.com/forums/showthread.php?p=31326#post31326

Take a look at ARQ and see what occurred yesterday. Is the volume high? Where is the close in relation to the days activity? What is to the left of todays bar (i.e. mid-December).
 
Hi,

Yes, forget who is buying....yeh, I don`t need their names or titles. Just their intentions. Charts reveal intentions.

It is easy to have a microscopic view of volume - price action and trade that action. But what about the trend in volume?

How about determining trends by volume by looking where the smart money - not directors - are buying or selling.

What is the crowd doing? Pushing up a price when volume is diverging!

Good: I can look and wait for the change and trade it.

By using volume studies I can look for where the smart money are building or diluting their positions. Who is actually buying or selling? I don`t know and don`t care. But I`m not buying with the crowd when volume is telling me to watch out there is a cliff coming.

Snake
 
Hey guys (first post - insert greeting and introduction here), but rather than opening a new thread, i will ask my related question here...

Now i understand that 1 volume is when a buy/sell transaction takes place, but how can i try to comprehend the effects of a decreasing sell price (people are desperate to get rid of their shares) and vice versa, in relation to volume...?

E.g looking at a weekly view of volume and bid prices, company XYZ's shares were

day1 - 10 000 traded @ a falling price of $2 to $1
day2 - 20 000 traded @ a falling price of $1 to $0.50
day 3 - 30 000 traded @ a falling price of 0.50 to 0.25

^ What is this an example off.. ? Seems more shares are being sold off at desperate prices to get rid of them. Would one be wary of buying these 'cheaper' shares at 0.25? Obviously people are buying them at 0.25 but why? with the expectation they are going to rise again and they thought they'd snatch up some speculative concern?

What if this followed:

day 4 - 10 000 traded @ a rising price of 0.25 to $1
day 5 - 30 000 traded @ a rising price of $1 to $3.

I'm not even sure if there is a direct question in this post so far.. haha. My head is clouded and was wondering how most people regard the influence of trading volume and what could be happening if there is a high volume & falling price, high volume & rising price, low volume & falling price, and low volume & rising price. Should i be concerned if shares i hold were experiencing unusual high trading volume with falling sell prices (with no obvious announcements approaching).

I recently skim read a book by Joseph Sammon, which had him believing that viewing volume fluctuations help determine the future of share prices, by seeing what 'insiders' might be doing. I felt there was some common sense in this, e.g. if a boring stable stock all of a sudden had high trading volume (and perhaps a somewhat unaltered share price one day) would demand attention?

Ill stop typing now, before i leak all my confusion into this one thread, and wondering if anyone has any general of specfic ideas of how to interpret volume...

(albeit i havent used the search function yet- this started out as a very basic question!)

Thanks in advance :D
-E
 
surelle said:
thanks for that ...I'm still not 100%, but I suppose time and experience will heal my confusion
why listen to baglimit...experience???

Before I joined this forum, my stockmarket returns ran at about 12% p.a., they are now up to about 22% - mostly due to Baglimit and his legendary tips - NVC (now PDO) and NMS - both which more than doubled in the 6 months since he first tipped them.

Is it luck, or is it skill? - who knows but i'll keep listening til I get burnt.

Good luck
 
thanks Fleeta

and I'm sure that Baglimit is feeling pretty good right now, he's obviously sitting well in your books
I'm here to learn, so all your advice has been great so far..who know's
I might be able to be a contributor soon
regards
 
thanks son of.. will do
I'm only new to this and getting a little frustrated at the moment as everytime i buy something it heads south instead of north...
not having much luck at the moment - need a kick start somewhere
:)
 
btw - have been watching this one and it hasn't done anything except sit in the one spot...with no volume of sales - why's that
 
surelle said:
thanks son of.. will do
I'm only new to this and getting a little frustrated at the moment as everytime i buy something it heads south instead of north...
not having much luck at the moment - need a kick start somewhere
:)
What you really need to do in my opinion is develop an actual trading plan which you know will be profitable over time even if individual trades make a loss. And that plan needs to be tested both on historical data and also in real time with no (or little) actual money being traded. Once you've got the plan sorted out, then trade will real $.

It's not simple but it's not as complicated as it may seem and is well within the ability of practically everyone. Those who succeed in the market are no more intelligent than most (in general) they just have a proven plan. :2twocents :)
 
Look for area's of large volume and note what impact the volume has on the prices. Is there high volume with the close being near the high of the day? This means buyers. If its high volume with a low close, then it means sellers. Tight ranges with high volume is important, as well as many other facets, so reading volume correctly is very important.
Nick explains it is important to assess large volume with ensuing price action.
 
Nick explains it is important to assess large volume with ensuing price action.

Its a great topic and widely miss understood.

Very low volume in context can also be very revealing.
Perhaps some chart examples would be beneficial.
 


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