Volume is the conviction meter
Volume is how many shares changed hands. A price move on heavy volume means many participants agreed to trade at those prices — it carries weight. The same move on thin volume can reverse just as easily as it came.
The classic tell: a breakout to a new high on surging volume is more trustworthy than the same breakout on quiet volume, which often fails and snaps back.
Range, gaps and liquidity
The day's range (high − low) shows how much the stock swung. Widening ranges signal rising emotion; narrowing ranges often precede a big move (a 'coil'). A gap is when a candle opens far from the prior close — usually news.
For Indian small-caps especially, always sanity-check liquidity (turnover = price × volume). A beautiful pattern on a stock that trades ₹5 lakh a day is untradeable — you'll move the price yourself.
The volume patterns that matter
You don't need to memorise volume theory — four shapes carry most of the signal:
- Breakout volume — a surge as price clears a level. Confirmation.
- Climax volume — a huge spike after a long run, often exhaustion (the last buyers pile in).
- Dry-up — volume fading into a support or a tight base. Sellers are done; often precedes a move.
- Churn — high volume but price goes nowhere. A battle; note who wins the next few sessions.
Turnover, not share count
A raw volume number is meaningless across stocks — always think in turnover (price × volume, i.e. rupees traded). ₹2 crore of daily turnover is a different world from ₹200 crore: on the thin one your own order moves the price and, worse, you may not be able to exit.
Rule of thumb for retail: if your intended position is more than a small fraction of a day's turnover, the beautiful pattern is untradeable for you.