Encyclopedia Classification
Category: Market Intelligence • Order Flow • Technical Analysis
Discipline: Volume Interpretation • Auction Theory • Institutional Analysis
Prerequisites
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Article 201 — Chart Patterns Encyclopedia: Flags, Pennants, Triangles, Wedges, Channels, and Breakout Structures
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Article 188 — Volume Analysis: Understanding Participation, Conviction, and the Force Behind Price Movement
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Article 190 — Market Profile: Auction Theory, Value Migration, and Institutional Market Structure
Related Articles
Order Flow • Market Profile • Liquidity • Wyckoff Method • Volume Delta • Trading Psychology
Definition
Volume analysis is the study of trading activity to understand the strength, conviction, and participation behind price movement.
Price tells you:
Where the market moved.
Volume helps explain:
How much participation supported the move.
The central idea:
Price movement without participation is often unreliable. Price movement with strong participation has greater market conviction.
Beginner Explanation
Imagine Bitcoin moves:
+\$5,000.
Question:
Was it a strong move?
Scenario One:
Low volume.
Few traders participated.
Scenario Two:
High volume.
Thousands of participants entered.
The price movement looks identical.
The underlying strength is different.
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