Volume is a count of trades in a security or market, or their derivative instruments and can be indicative of trends and sentiment.
Volume is the number of trades in a security or market in a given time. Trade volume is important because it helps analysts pick apart the factors driving a trend or get an idea of the strength of a trend.
Potential buyers and sellers can push the Bid and Ask prices around at will, hypothetically, but a trade only occurs when the buyer and seller transact business; also, even only a minimal number of trades can move prices around, but this is not indicative of a strong trend — a few trades more and the price is where it was before.
High volume could indicate that a trend is picking up momentum, and with many open positions in a security, there is likely to be some support or resistance to movements outside of a standard deviation. Or, if there's a big sell-off, for example, it could indicate that a trend has ended. If prices are rising and falling but there are more buyers in the troughs than sellers in the peaks, it is a bullish sign.
The are many volume indicators, such as On Balance Volume (OBV), Volume Price Confirmation Indicator (VPCI), Chaikin money flow, Klinger Volume Oscillator, and so on.
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