Number of Trades

Type

Volume Indicator

How does it work?

Number of trades shows how many trades were placed on a security for a particular day. It can be used to gauge the enthusiasm for the buyers and sellers on the security.

Being independent of price, the number of trades is another tool in which you can use to analyse the security. It can be seen beneath the chart below in histogram form.

Trading Signals

The volume of trades can be used to analyse the activity of a security. The number of trades shows the intensity of a price move.

If a price move is associated with a large number of trades then the move is strong, if the move is associated with a small number of trades then the price move is weak and may not hold.

Low levels of trades are characteristic of the indecisive expectations that are present in consolidation periods and market bottoms.

A higher number of trades will occur at market tops when there is a strong consensus that prices will continue to rise. It is also very common for the number of trades to rise at the beginning of new trends.