Trading volume: how to read it
Trading volume on a real stock: General Motors in 2025
At the bottom of the price chart, volume is the faint row of bars every chart carries. In the panel below it is enlarged: one bar per session, green if the close is above the open, red if below; the amber line is the average volume of the last sessions. The dashed line marks the highest volume of the period.
InteractiveRead a session. Click a day on the chart or a bar in the panel: you get the volume, its average and how many times it exceeds it.
How to read trading volume
Fig. 1 · Anatomy
- Every bar is one session: its height says how many shares changed hands.
- The color follows the candle: green if the close is above the open, red if below.
- The amber line is the 20-day average: above the line volume is high, below it is low.
- Every trade has a buyer and a seller: volume does not say who won, it says how many took part.
thresholds used on this page: more than 2 times the average = very high · 1.25 to 2 = high · 0.75 to 1.25 = average · 0.5 to 0.75 = low · below 0.5 = very low (there is no official number)
Volume confirms the trend
one of the six tenets of Dow theory: a healthy trend has volume on its sideFig. 2 · The confirmed uptrend
- The price climbs in steps: up legs and pullbacks.
- On the up legs the bars are tall: many are buying.
- On the pullbacks they are short: few are selling.
Fig. 3 · The confirmed downtrend
- In a downtrend it is the other way round: volume grows when the price falls.
- On the bounces the bars are short: few are buying.
- There is one rule: volume expands in the direction of the trend.
Fig. 4 · When it does not confirm
- The price makes a new high.
- But each up leg carries less volume than the one before.
- That is a divergence: a warning that the drive is thinning, not a sell signal.
Fig. 5 · The volume spike
- One session with volume many times the average.
- It comes from quarterly earnings, news, an index change, options and futures expiration.
- After a long decline the textbooks call it a selling climax: whoever wanted out has sold.
- On its own it gives no direction: what matters is what the price does next.
Breaking a level: with volume or without
Fig. 6 · Breakout on heavy volume
- The price has touched the same resistance three times.
- It clears it on bars far taller than the average.
- Heavy trading above the level: the breakout has participants.
Fig. 7 · Breakout on light volume
- Same resistance, same breakout: but the bars stay short.
- Little trading above the level: the textbooks call it a suspect breakout.
- Here the price falls back below the level: a false breakout.
The reading rules, in short
six things to look at, always against the average1High and low are relative to the average
- the yardstick is the 20-day average: about one month of trading
- a heavily traded stock and a thinly traded one read the same way: in multiples of the average
General Motors, 2025: average volume 10.8M shares per session
2Volume follows the trend
- in a healthy uptrend volume rises when the price rises
- and shrinks on pullbacks: the sellers are not convinced
3New high, less volume
- the price clears the previous high but on fewer trades
- a warning, not a signal: the drive has fewer participants
4Spikes
- one session many times the average: something happened that day
- quarterly earnings, news, index changes, technical expirations
General Motors, 2025: 9 sessions out of 249 above twice the average
5A breakout needs volume
- a level cleared on heavy volume has many trades behind it
- on light volume the breakout is suspect: wait for the price to confirm it
6Stocks and futures
- stocks only have volume: the trades of the session
- on futures you also watch open interest: the contracts still open at the end of the session
Deeper dives: Dow theory.
Interactive exerciseYour turn: find the volume that matters
General Motors, 2025: two clicks on the real chart- Click the session with the highest volume of the year: the tallest bar in the panel.
- Now click another session with volume more than twice its 20-day average.
- Read the verdict: the criteria with their thresholds, and how many such sessions the year had.
The click snaps to the tallest bar within 3 sessions. Start with the highest-volume session of the year.
The General Motors volume spikes of 2025
the sessions above twice the 20-day average| Session | Volume (M) | 20-day avg (M) | Times the avg | Candle | Vs. prior close |
|---|---|---|---|---|---|
| 34.1 | 9.6 | 3.55 | red | −8.9% | |
| 28.9 | 12.3 | 2.35 | green | −3.1% | |
| 28.2 | 11.7 | 2.42 | green | +7.2% | |
| 37.9 | 17.3 | 2.20 | green | +0.7% | |
| 22.4 | 9.8 | 2.28 | red | +0.2% | |
| 33.9 | 10.1 | 3.36 | red | −8.1% | |
| 25.8 | 10.8 | 2.40 | green | +8.7% | |
| 43.8 | 10.0 | 4.38 | green | +14.9% | |
| 23.4 | 10.8 | 2.18 | green | +1.5% |
A spike says that something happened that day, not what. The usual causes: quarterly earnings, news about the company or its industry, joining or leaving an index, options and futures expiration. To find out, check the company calendar and the news of that date. The candle says whether the session closed above or below its own open; the change is against the previous close: after a strong gap up the two can disagree.
Third Friday of March, June, September or December, the day options and futures expire together: , , . In those sessions volume rises for technical reasons and says nothing about the strength of the trend.
Where to go from here
The indicators · VolumeThe other lessons in the guide
What is technical analysis
- the study of price and volume to recognise the trend and the levels
- three premises: price discounts everything, trends, history repeats
- exercise: uptrend, downtrend or sideways on three real charts
Candlestick chart
- the four prices of a session: body and shadows
- green and red, long and short bodies, long shadows, the doji
- find the candle on a real chart: the judge says yes or no with the numbers
Uptrend: higher highs and higher lows
- higher highs and higher lows: how to recognize an uptrend
- swing points, and the two signals that end a trend
- mark the higher lows yourself on a real chart
Support and resistance
- the level where the decline stopped, and the one where the rise stopped
- touches, time and volume: how much a level counts; once broken, it switches roles
- find the level yourself on a real chart: the judge counts the touches
Frequently asked questions
What is trading volume?
The number of shares that changed hands in a session. Every trade has a buyer and a seller and counts once: a hundred shares bought are the same hundred shares sold. On the chart it is the row of bars below the price, one per session.
What counts as high trading volume?
Volume above its own average. The most common yardstick is the average volume of the last 20 sessions: on this page volume is high above 1.25 times the average and very high above twice. General Motors, on : 43.8M shares, 4.38 times the average.
What does it mean that volume confirms the trend?
That it rises when the price moves with the trend and shrinks when the price corrects. In an uptrend: tall bars on the up legs, short bars on the pullbacks. It is one of the tenets of Dow theory. If the price makes a new high on lower volume, the confirmation is missing.
What is the difference between volume and open interest?
Volume counts the trades of the session and starts again from zero every day. Open interest exists only for futures and options: it is the number of contracts still open at the end of the session. On stocks you watch volume; on futures both.
Method and sources
| Source |
|---|
| John J. Murphy, Technical Analysis of the Financial Markets: chapter 7, volume and open interest; chapter 2, Dow theory (volume must confirm the trend). |
| Robert D. Edwards, John Magee, W.H.C. Bassetti, Technical Analysis of Stock Trends, 9th ed.: volume in reversal patterns and breakouts. |
| William Peter Hamilton, The Stock Market Barometer, 1922; Robert Rhea, The Dow Theory, 1932: volume as confirmation of the trend. |
The chart uses the General Motors sessions from our archive from to , adjusted for dividends and corporate actions; volume is rounded to thousands of shares. The peak and the number of sessions above twice the average are verified at every update. The numbered figures are diagrams drawn to explain, not prices. This guide explains how the tools work: it does not contain investment recommendations and promises no returns. Our method · licence · report an error.
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