High volume {very cheap stocks} are {the best} stocks to trade. {I love} volatile stocks. If there’s no volume, there’s no trade.
Why’s volume so important? High volume stocks have {the largest} {prospect of} big moves.
But there’s more to it than that. High volume doesn’t always mean a stock price will {rise}. A stock can {decrease} with high volume if {there are a great number of} sellers…
Before you {have a} trade, {you need to} put {all of the} indicators together.
{In this article}, I’ll {review} {just what a} high volume stock means, why it’s so important, and I’ll share some high volume {very cheap stocks} with charts. Read on…
Table of Contents
{WHAT EXACTLY ARE} High Volume Stocks?
High volume stocks are {people that have} {a lot of} shares traded over {a particular} {time period}. {Trading} volume {depends upon} {the sort of} stock. On its slowest day, Apple Inc. (NASDAQ: AAPL) will trade {greater than} any penny stock.
But that doesn’t make Apple {an improved} stock to trade than {very cheap stocks} – {never}.
{Plenty of} penny stock traders think high volume stocks are automatically good and low volume stocks are automatically bad. It’s not {that easy}. {You need to} {consider the} total situation.
{In case a} stock’s volume is high {just because a} surge in {selling or buying} is making {the purchase price} move, that’s worth {considering}. {You need} prices {to go}. Volatility {could} mean profit!
But {in case a} stock’s volume is high {because} it’s always high, then who cares? {Allow} high-frequency traders make their profits with Apple. You can’t {contend with} them.
{HOW WILL YOU} Determine a Stock’s Volume?
All stock charts show trading volume {and also|along with|in addition to} price.
{For every} day, {consider the} bottom, below the graph displaying {the purchase price} history. You’ll {visit a} vertical bar. The scale of the bar chart is on {the proper}. You’ll see {a good example of} volume bars {in a few} chart examples I share later…
You’ll see {instantly} just from {considering} the height of the daily bars {if the} volume is trending up or down. {Usually|Quite often|More often than not} with {very cheap stocks}, it just bounces around randomly. Most charting tools {enable you to|permit you to} set a moving average for volume. {This can} {assist you to} easily spot volume anomalies.
{In the event that you} spot {an abrupt} surge in volume {over time} of low volume trading, {which could} indicate {the} pump or {some type of} unusually good or bad news {because of this} stock. And {which could} represent a trading opportunity.
Stock Volume vs. Dollar Volume
{It is possible to} measure volume {utilizing the} {amount of} shares or by the dollars transacted. {The amount of} shares {may be the} exact {amount of} shares bought and sold that day. {Nevertheless, you} also {desire to} {consider the} dollar volume involved, because every stock trades at {another} price.
{To get the} dollar volume, simply multiply {the amount of} shares bought and sold by {the common} price. Boom. Done.
{For example}, if I {let you know} a company’s trading volume yesterday was 10 million shares, {it might seem} that {appears like} {a higher} volume. However, if the stock shares average {just a} penny per share, that’s only $100,000 in dollar volume, {that is} {tiny}.
{In case a} company’s stock {will probably be worth} $10, and traders bought and sold one million shares, its trading volume is $10 million. That’s {a whole lot} larger than {the initial} example.
{HOW COME} Volume Matter?
{Once you} trade a stock, {you would like to|you need to|you wish to} {enter} and out quickly, without affecting {the purchase price}. That’s {a disagreement} for trading high volume stocks. With low volume stocks, {you need to} wait to be filled – {as well as your} order jacks up {the purchase price}.
{If you want} {to obtain} out, {you would like to|you need to|you wish to} sell fast. You don’t want your order to signal other traders it’s {time and energy to} raise their prices.
Changes in trading volume also {let you know} something’s going on and indicate the stock price is moving. Traders don’t {trade} in large volumes {minus the} stock’s {selling price} surging or dropping, {based on} whether fear or greed is dominant.
{Whenever a} stock’s volume surges {in one} million to 10 million shares, {that could} indicate {a predicament} you can {benefit from}.
However … {sustain your} trading discipline. {Search for} the trading patterns and chart formations that work. {Considering} a stock’s volume {is merely} one factor {you need to} check out {once you} {research your facts}.
{Great things about} Trading High Volume Stocks
Volatility
{Whenever a} stock is trading with high volume, {this means} {many people} {want} in {the business}. {Lots of people} are taking positions, {wanting to} buy or sell at a profit. Money is flowing fast and furious.
The {additional money} flowing {in to the} markets around {a specific} company, {the much more likely} the stock {would be to} {create a} large price move – up, down, or both. Volatility {can be your} friend.
- When you’re on {the proper} side of a trade, large price moves {often means} the {prospect of} more profit.
- When you’re on {the incorrect} side, {it is possible to} lose {additional money} than usual. That’s why rule #1 {would be to} cut losses quickly!
Liquidity
Stocks with high volume {tend to be more} liquid. {Which means} it’s easier and faster {to really get your} orders filled. {You can purchase} or sell more shares of a stock without {your personal} orders pushing the stock’s price higher or lower.
{So when} you’re {prepared to} close out the trade, high volume and liquidity {ensure it is} {better to|simpler to} buy or sell without your closing order pushing {the marketplace} against you.
High volume with a fast-moving share price can indicate news {or perhaps a} catalyst {reaches} play. {Search for} earnings announcements, contracts with large companies, product launches, and {pr announcements}.
I {review} chart patterns, catalysts, earnings, and contract winners {in my own} most comprehensive DVD, “{Steps to make} Millions.” It’s 35 hours of in-depth education. All {arises from} the purchase {head to} charity – it’s a win-win!
Volume {is merely} one {trading} indicator. {Consider the} big picture. {Research your facts} and stock analysis. {Search for} other indicators of {an excellent} trade.
If the high trading volume indicates a stock is breaking out or {going right through} a trendline, consider making your play.
{Sustain your} discipline. Manage your risk. Don’t let one indicator fake you out!
I {review} the indicators I consider {before each} trade {in my own} Sykes Sliding Scale. {Find out more about} it {in my own} “Trader Checklist Part Deux” DVD. {A few of} my indicators have {nothing in connection with} the stock or the chart. Think {dilemna}!
{Where to find} High Volume Stocks in 3 Steps
Here’s {a competent}, three-step plan {you may use} when you’re {trying to find} high volume stocks…
#1) {Search for} the high volume {very cheap stocks} that have {risen} {probably the most} since yesterday’s closing price.
Price movement is more important than trading volume. And stocks {which have} surged {in a single} day have {probably} had a corresponding rise in trading volume. {Should they} don’t, {you might want to} {prevent them}.
Stocks {which are} up big {must have} high volume pushing the stock higher. {In case a} stock is up 5% on below-average volume, {it may be} a trap set by {the marketplace} makers {to obtain} rookie traders into bad positions.
{Understand that} volume validates {the purchase price} movement. {A big} {upsurge in} a stock price {Should be} {associated with} an equally large {upsurge in} volume.
Yes, seriously. I’m {searching for} companies {which are} being hyped. But never believe people on {social media marketing} or in {boards}. Always do {your personal} research.
Go in {together with your} eyes {spacious} {as well as your} hand holding tight to your wallet. If somebody’s pushing {a little} stock higher, {perhaps you} can hitch a ride – just don’t believe you’ve found {another} Apple.
#3) {Work with a} software platform with killer scanning tools.
{I take advantage of} StocksToTrade {each day}. I’ll {let you know} why in {a little} when we {have more} into detail on software.
{Fortunately}, {there are many} {very cheap stocks} with high trading volumes. {You have to|You should} analyze the opportunities {and that means you|which means you} find those worth trading. {The proper} software {will help you} {see them}.
Technical and Fundamental Analysis
Fundamental analysis {may be the} {procedure for} researching a stock {in line with the} fundamental value of {the business}.
You look at {things such as} what sector the company’s in, whether it’s {among the} sector’s leaders or laggards, whether it’s making or {losing profits}, and {100} other factors.
Technical analysis means studying the stock’s chart indicators. {The most crucial} {is actually} its {market} price. And the chart {teaches you} {days gone by} price moves. {You can observe|You can view} {instantly} whether it’s been {increasing} or down or floating sideways.
A stock’s past price movements {can make} recognizable patterns. These indicate the collective emotions of {the marketplace} toward the stock and how traders {have already been} {investing} it in reaction.
Those patterns tell {a tale} {concerning the} stock’s past {and may|and will} help predict its future. {The purchase price} action normally forms a trendline that’s headed either up or down. {In case a} stock breaks {by way of a} trendline, that’s significant.
{Considering} a chart {is vital} for determining {if the} stock’s trading volume is high. {Also it} contains {substantially more} information.
Markets {certainly are a} {type of} crowdsourcing, and technical analysis is {the method that you|the way you} read what the masses of other traders and investors {say} {in regards to a} stock {and its own} future.
Analysis Software
Researching, studying, and analyzing stocks involves crunching {lots of|plenty of} numbers, and computers {certainly are a} lot better at that than people.
While software {may bring} up company information and news, you’re ultimately {in charge of} deciding whether {which makes} a company {an excellent} opportunity.
Yes, software can draw trendlines and calculate moving averages, {nevertheless, you} have to {know what} the indicators say {concerning the} potential trade.
{Consider}:
- Is this stock {an excellent} trading {chance for|chance of} you?
- What do {all of the} patterns and numbers actually mean?
- Is volume where {you need} it, or {could it be} a possible fake-out?
I’ve used many trading platforms {through the years}, but couldn’t find {one which} had everything I {had a need to} {perform} my trading as quickly {so when} conveniently {when i} wanted to…
… {THEREFORE I} stepped up and {achieved it} myself ({alongside} {an unbelievable} team).
StocksToTrade
StocksToTrade {may be the} trading platform that – finally – does everything I ever need.
You don’t {have to} visit 10 or 15 websites {to maintain} {with all the current} most in-play stocks!
With StocksToTrade {you obtain} charting, news feeds, quotes, watchlists, {and much more}, all {inside a} user-friendly {software application}.
{It offers} me {all the details} I use {in my} trading – and does it {efficiently}.
{Obtain the} new Breaking News Chat add-on feature {to obtain} fast alerts on breaking news that’s {highly relevant to} penny stocks! {It had been} a game-changer {for me personally} in the insane 2020 volatility.
{Have a look at} {both} platform and Breaking News {Speak to} a 14-day trial for $17.
(Full disclosure: I helped develop StocksToTrade and I’m {a significant} investor.)
{Adhere to} Your Indicators and Favorite Patterns
{There should be|There has to be} a hundred {or even more} trading patterns and indicators. {Perhaps a} thousand.
{Must you} learn and master {every one of them} to potentially {earn money} trading {very cheap stocks}?
Nope!
{You should know} {how exactly to} read a chart. {You should know} {the fundamentals} of trends and trendlines, volume, and moving averages.
Learn the patterns and indicators that {work very well} {for you personally} and {stick to} them. {Once you} trade, {concentrate on} what works {for you personally}.
Bonus Tip: Knowledge Supports Growth
{You must never} stop learning. Markets change. Economies change.
{Your day} you believe {you understand} {everything}, that’s when somebody will {work out how to} eat your lunch … {as well as your} breakfast, dinner, and {late night snack}. Don’t let this {eventually} you! {Continually be} {prepared to} keep learning and adapting.
Does High Volume Mean a Trade {May be beneficial}?
High trading volume is one factor {to take into account} when you’re {creating a} trade – but it’s not remotely {the only real} factor.
{Go through the} big picture. Has there been some important news {concerning the} company? Sometimes, this makes {an enormous} difference.
{In case a} stock’s trading volume is high {because} it’s always high, {however the} price isn’t trending or breaking out, forget it.
High volume {is wonderful for} confirming breakouts are real and {the purchase price} can {continue steadily to} surge.
{Search for} your indicators and chart patterns, then see {in case a} high volume confirms the breakout!
Becoming {WELL INFORMED} About Trading High Volume Stocks
As you’ve learned, a stock with {a higher} {level of} trades {is an excellent} thing, but that alone isn’t {an indicator} of a sure thing. That’s {a standard} beginner’s mistake.
As you study and practice trading, you’ll {are more} confident about {stock trading}.
You’ll {have more} adept at spotting breakouts and the chart patterns that {let you know} {whenever a} stock {is approximately} to smash {by way of a} point of resistance.
Higher-than-normal volume {may also} tell you {whenever a} signal is valid. {This means} {plenty of} other traders {are receiving} in on the action {since they} want {a bit of} it.
{THINK ABOUT} Low Volume Stocks?
A stock with {level of} 500,000 {to 1} million shares {is okay} to trade, {up to} few thousand shares. Just {be sure you} {stick to} top of it {to get} out fast if {the purchase price} starts {to go} against you.
If there’s big news {in regards to a} stock with {a minimal} volume, that’s a red flag. {It might} mean someone’s {attempting to} run a pump {onto it}. Stay alert!
Always Avoid Stocks {WHICH ARE} too Illiquid {for just about any} Trade
Illiquidity {may be the} {problem} with low volume stocks. {Once you} buy, {your personal} order raises {the purchase price} you pay.
{When you wish} {to market}, nobody {really wants to} take your order. {It is possible to} lose {a lot of money} just {attempting to} run for the exit.
{Avoid} all stocks trading at 50,000 or fewer shares {each day}, period.
How Important Is Stock Volume for Penny Stock Traders?
{In the event that you} can’t tell {right now}, volume’s pretty important {when contemplating} which stock to trade.
It’s {among the} first things I look at {when contemplating} which stock to trade. {You could have} a stock {going to} {use} with {an ideal} chart, and a catalyst … but if there’s no volume, there’s no play. {This means} nobody else cares.
{Minus the} volume and demand, it’s gonna be harder for the stock price to climb higher.
And that’s ultimately what we’re {searching for} out of a trade – to {benefit from} {an instant} upward price movement.
{WAYS TO} Use High Volume Stocks {to boost} Your Trading Strategies
{In the event that you} {adhere to} trading {the best} average volume stocks, {it is possible to} avoid {plenty of} unnecessary trading mistakes.
You don’t {need to} trade {each day}. I don’t.
I only trade {the best} odds setups, {plus they} don’t come around {each day}. {All of the} indicators {need to} come together {to point} a trade. No volume means no trade. That’s why {I love to} {think about} myself as a retired trader. And I only {emerge from} retirement {to discover the best} setups.
{VERY CHEAP STOCKS} With High Average Daily Trading Volume
Obviously, large-cap stocks have higher average trading volume than {very cheap stocks}. But when {the proper} news is released {by way of a} penny stock company, {it could} bring in {large sums} of volume.
Look at {a few examples} of how volume {can make} big moves in penny stocks…
FuelCell Energy, Inc. (NASDAQ: FCEL)
FCEL was trading in a channel between around $2 and $3.50 for months. {Once the} alternative energy sector got hot and electric vehicles (EV) and solar plays were running, FCEL released some news.
It {earned} huge volume and the stock broke above resistance and had {a large} move.
NIO Limited (NYSE: NIO)
Although this stock {is currently} trading in the $40s and it’s {definately not} penny stock status … {just a few} months ago {it had been} at $3.
{This is exactly what} huge volume and a hot sector {can perform} to a stock. It’s been {probably one of the most|perhaps one of the most} active stocks on the NYSE in 2020. {Go through the} volume bars on the chart. NIO had multiple days where it traded {over fifty percent} a billion shares. Even its lowest volume trading days were 30 million to 50 million shares.
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{FAQS} About High Volume Stocks
{COULD IT BE} {Best for} a Stock {to possess} High Volume?
Definitely! For {the sort of} trading {I really do}, {I’d like} high volume and preferably a catalyst {and also other} key indicators. The catalyst {provides} reason for {the quantity}. {That may} add conviction to a trade. A {trading} its average daily volume doesn’t interest me.
{WHAT GOES ON} {Whenever a} Stock’s Volume Increases?
{Whenever a} stock has high volume, {this means} {you can find} more traders and investors {investing} the stock. If there’s more demand, {this means} higher prices. If there’s more selling, {this means} a decline in prices.
What’s {an excellent} Average Volume in Stocks?
I don’t really care {just what a} stock’s average volume is. I don’t trade stocks {normally|typically} days. What {I wish to} see is {greater than} average volume in a stock, {so that it} {gets the} potential {to produce a} big move. {This way} I can {enter} and out and {benefit from} {an instant} price move.
Which Stock {Gets the} Highest Volume?
The {trading} {the best} volume {changes} from {daily}. {A good} stock with {the best} average volume {can transform} as new hot stocks and sectors come and go. I’m always {searching for} {another} opportunity. My strategy isn’t about trading {exactly the same} stock {again and again}.
{UNDERNEATH} Line
Congrats – you {managed to get} to {the finish} of the lesson! Now I’ll wrap this all up in {a good}, tidy package for you…
- Avoid all stocks {which have} low liquidity.
- Don’t trade high volume stocks {because} {they will have} high volume. {Search for} chart patterns {along with other} indicators that signal {an excellent} trade setup.
- Volume {is going} up {whenever a} stock’s price makes large moves {per day}. Use high volume {as a means} of confirming {the purchase price} action. It supports the breakout from the trendline or resistance level.
- {In case a} stock’s price jumps or falls {a whole lot} {with out a} corresponding surge in trading volume, that’s a red flag.
- A spike in trading volume {also needs to} accompany news {as an} earnings surprise or product launch.
- {You’ll find} stocks to trade by {searching for} {people that have} large percentage increases in trading volume. {Which could} indicate {a significant} surge {popular} for the stock, and, therefore, {a big} movement {in cost}. Happy hunting!
How {perhaps you have} used volume in your technical analysis? What {perhaps you have} learned by trading {predicated on} volume analysis? {I wish to} hear {about any of it} – share your comments!