Value of Volume & Momentum

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What are the three major aspects of market analysis in trading - Study of Price, Volume and Open Interest. How are they useful?


Value of Volume & Momentum The three-dimensional approach towards the market analysis is inclusive of a study of price, volume and open interest. While Price & open interest holds a crucial value, the volume however is equally pivotal. Volume defines the entire amount of trading activity or contracts that have been performed in a particular market for a single trading day. If chart shows a higher volume bar, it means that the trading activity was heavier for that particular day. Along with volume, traders also use momentum to make smart investment decisions. They buy securities that are rising and sell them when they look to have peaked. The approach around momentum trading is to "buy high and sell higher" or "sell low and sell lower". Let's understand more about executing futures trades in the next chapters. Read about importance and journey of technical analysis on Smart Money by Angel Broking.

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