volume
Volume is the footprint
The rule
Volume is the footprint of a real crowd. A move on thin volume is a claim with almost no one behind it.
Where it flips
Volume can spike for reasons that have nothing to do with belief, like index changes, expiry day, a block deal, or a one-off event. So high volume is not always 'smart money'. The fix is to ask what the volume was for, and to lean on delivery volume, not raw traded quantity, in the Indian market.
Wyckoff taught reading price and volume together. A rise on heavy volume shows many real hands trading. The same rise on light volume shows few people and little belief. Volume is proof that a move was funded by real demand or supply, not just a few trades. It does not tell you the direction by itself. But it tells you if the move has a crowd behind it or is walking alone.
A worked example
A stock 'breaks out' above resistance, but on volume no heavier than a dull afternoon. Delivery percentage is low. The move has no footprint of real buying, and it slips back into the range within days. A breakout with heavy delivery volume would have carried very different weight. [illustrative]
How to spot it
- ·a breakout or breakdown on unusually light volume
- ·delivery percentage far below the stock's own normal, on a big move
- ·a price move you cannot match to any real rise in how many people traded
Richard Wyckoff · The Richard Wyckoff Method