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Charting Made Simple: A Beginner's Guide to Technical Analysis by Roger Kinsky

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Chapter 9: Volume

In this chapter I’ll explain the significance of volume in conjunction with price trends. I’ll discuss in greater detail the equi-volume chart and outline an important volume indicator known as on balance volume (OBV).

Volume recap

I’ve mentioned volume in previous chapters so first I’ll briefly summarise some important points:

⇒ Volume is the number of transactions in each trading period, so on a daily chart it’s the number of trades each day and on a weekly chart the number of trades each week.

⇒ Every trade involves both a buy and a sell transaction, so volume is the number of shares purchased or the number of shares sold as these numbers must be exactly equal.

⇒ Demand is the number of shares ordered (bids) and supply ...

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