Section 1 · Stock Fundamentals
What is Volume?
The number that tells you how much conviction is behind a price move.
Price tells you what. Volume tells you how much people care.
Volume is the total number of shares traded during a period. A stock jumping 10% on 10x normal volume is a real move — institutions are involved. The same move on low volume might be a fake-out with no follow-through. For momentum traders, volume is the fuel. No volume = no momentum. High volume = the crowd is here.
3 things to know
Average daily volume (ADV) is the benchmark — compare today's volume to the average.
Relative volume (RVOL) of 5x or higher is a strong momentum signal.
Low-volume moves often reverse quickly — the move has no conviction behind it.
Dive Deeper
Relative volume (RVOL) signal strength
RVOL 10×+
Extreme momentum — institutional involvement certain
RVOL 3–5×
Strong momentum — worth a close look
RVOL 1.5–2×
Mildly elevated — confirm with price action
RVOL < 1×
Below average — no momentum, likely to fade
Key vocabulary — tap each card
Practice
Scenario
RXMD is up 45% today. At 10:00 AM you check volume — it has already traded 8× its average daily volume with 3 hours of trading left. What does this most likely tell you?
Did you know?
On the day of GameStop's biggest move (Jan 27, 2021), GME traded 93 million shares — roughly 40 times its average daily volume. That's what extreme momentum looks like.