Volume is an important part of the technical analysis process, as it may often help confirm the trends that are seen on a stock's price chart. Volume is the number of shares bought and sold when the market is open. Active stocks will have higher volume levels. Used in conjunction with a price chart, volume can be a very important piece of the analytical puzzle.

High volume tells us there is a lot of trading going on at the current price and a move in the stock could be imminent. Generally speaking volume decreases when a stock is consolidating or retracing to a lower price. When a market is bullish, volume will usually expand on rallies and contract on declines. When the market is bearish, volume should expand on declines and contract on rallies.

In general, if a stock price is rising and the volume is high, the stock will be bullish. If a stock price is high and the volume is falling, the stock will be bearish. If a stock price is falling and volume is high, the stock will be bearish. If a stock price is falling and volume is low, the stock will be bullish. If a stock is in an uptrend, the move will be confirmed by the presence of large volume. Likewise, the lack of volume in a trend can show weakness and may mean a new trend is on the horizon.

Charts found on most online brokerage sites will have an option to include volume bars on their presentations. The size of the bars are generally important, as the big volume spikes are easy to see and make it possible for a trader to match up with the reaction of the stock's price. By adding a line that denotes the stock's average volume move, a trader can easily determine the importance that volume had on the stock. Some programs, like BetterTrades' Extreme Charts, enable users to view the volume bars in color, allowing them to quickly determine whether it was a bullish or bearish day.

It's critical for any trader to be aware of a stock's volume. It can provide many clues about which direction a stock may take and needs to be included in the toolbox of any trader who is serious about making money in the market.