Question of volume

[timeiz2short]

I was reading some of the lessons and he was saying concerning volume you want people buying and not selling. I mean a lot of people can sell and I believe what he said was that still constitutes volume however if people are selling then who's doing the buying. It just seems like either way there's a lot of buying going on so what's exactly happening and what's wrong with the picture when so many people are selling. Also does a company own only so many stocks or is it investors that determine the number of stocks a company possesses?

Peace

[Airelon]

Not sure of your question regarding volume, but the best way that I try to explain volume - is that it is the ultimate 'strength' indicator. In other words, a lot of volume can generally mean that the direction the market is trending has strength behind the move. Conversely, let's say the market is starting to move in a certain direction? But the volume is falling. That would show you that the move doesn't have a lot of strength behind it.

There's an old saying: "The trend is your friend, trade with the trend. But volume is your best buddy".

Regarding the number of shares out there? Yes, at any given time, it's limited, and this relates to a concept called the "market cap". However, a company can decide to issue new shares of the company to the market, raising more capital - however this also generally hurts (for the short term) the price of the stock.

[Novice Investing]

timeiz2short:

Correct. There is the same shares bought and sold even when volume is high. However, high volume represents interest to the direction of the shares. As Airelon says, if shares rise on high volume, this means the general direction ot the shares is up. Why is that so? Let's elaborate.

High volume means: more transactions, despite the fact that the amount of buying and selling is the same. (It has to, otherwise transactions won't occur). When price rises, it is understandable that some sellers would want to take some profits of the table. But why there are also the same amount of buying at this higher price? They must buy in 'anticipation' that price will rise even more. Otherwise, what is the point of buying? Thus, high volume indicates the direction of the shares even when there is the same amount of buying and selling occuring during a specific period.