Pros and cons of volume
Pros of volume
Volume can be used to measure stocks, bonds, options, futures, commodities and forex. However, volume is used most often in share trading, where it shows the number of shares that are being traded.
As volume offers an extra dimension when examining an asset’s price history, it is a popular tool in the technical analysis of markets. It helps determine the strength of price movements. If a price movement is accompanied by a proportionate increase in volume, it is seen as more significant than one that isn’t.
Cons of volume
Each market or exchange will track its own volume and distribute the data to traders. These volume reports usually come once an hour, but they are only estimates – for accurate volume figures traders have to wait until the end of the day.
However, there are other ways that traders can determine market volume, such as the tick volume or number of price changes. If the market price is changing rapidly, it can be an indicator of high trading volume.