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How to read volume: what the bars under your chart show

Under most charts sits a row of bars. They show how much traded, candle by candle. Read them right and they add context to price. Read them wrong and they tell a story that isn't there.

Beginner guide · 7-minute read · Updated 2026-10-21

What volume measures

It's simpler than it looks.

Volume is how much traded during one candle.

• On a stock chart, it's the number of shares.
• On a futures chart, it's the number of contracts.
• On crypto, it's the amount of the coin traded on that exchange.

One bar per candle. A tall bar means a lot changed hands. A short bar means it was quiet.

A simple example

Say a stock's last 5 daily volume bars are:

• 2.0 million, 2.2 million, 1.8 million, 2.0 million, 2.0 million

The average is 2.0 million shares a day.

Today it trades 6.0 million. That's 3 times the average. Something got people's attention.

That's the main skill: comparing a bar to its recent normal. A bar on its own means little. A bar that's far above or below normal is worth a look.

Many charts let you add a moving average of volume (often 20 candles) to show that normal level as a line.

What the colors mean (and don't)

Here's the thing most guides skip.

On most charts, a green volume bar just means the candle closed higher than it opened (or than the last close, depending on the setting). Red means it closed lower.

It does not mean "buyers won" or "more buyers than sellers".

Every trade has a buyer and a seller. 1 million shares bought is 1 million shares sold. Volume counts the trades, not which side was keener. Price shows you who pushed harder.

How traders read volume

Breakouts

A Breakout past a level on high volume shows many people took part. A breakout on thin volume shows few did.

Neither one guarantees anything. But a candle body closing past a level, on volume well above normal, gives you two facts instead of one. See breakout vs fakeout.

Pullbacks

In a healthy uptrend, pullbacks often come on lighter volume than the push before them. Heavy volume on a drop inside an uptrend is worth noticing.

Spikes

A sudden huge bar often lines up with news: earnings, a jobs report, a Fed decision. It tells you the market reacted. It doesn't tell you what comes next.

Time of day

US stocks often trade most near the open and the close, and less around midday. So a "quiet" bar at lunch isn't the same as a quiet bar at 9:35 am. Compare like with like.

What volume can't do

• It can't predict direction. High volume can come at the start of a move or at the very end of one.
• It doesn't show who's winning. Every share bought was sold by someone.
• It's not the same in every market. Spot forex has no single central exchange. The volume a forex chart shows comes from one data provider, and is often tick volume: a count of how many times price changed. That can follow real activity, but it's not the whole market.
• Crypto volume is per exchange. The same coin can show very different volume on different exchanges.
• It's noisy on tiny timeframes. On a 1-minute chart, one big order can make a tall bar that means little.

Where it fits with our method

We read the chart's turning points first: the last places price turned around. Higher highs and higher lows, or the reverse.

Volume can then be a second opinion:

• Price breaks past a level, the body closes past it, and volume is well above normal. Two facts agree.
• Price breaks past a level, but only a wick pokes through on quiet volume. Two reasons to be careful. That looks more like a fakeout, or a liquidity sweep.

Volume never overrules the chart. A big bar doesn't turn a downtrend into an uptrend.

One clean read beats six indicators.

Common mistakes

• Reading the color as "who won". Green only means the candle closed up.
• Judging a bar alone. Always compare it to its recent normal.
• Ignoring time of day. Open and close are busier than midday on US stocks.
• Trusting forex volume like stock volume. It's one provider's view, often tick volume.
• Trading on volume alone. Volume adds context. The plan, the level and the stop still come from the chart.

Try it today on TradingView

About 10 minutes.

1. Open a daily chart of a big US stock. Volume usually shows by default. If not, add "Volume" from Indicators.
2. Turn on the volume moving average in the indicator's settings, if it isn't on.
3. Find the 3 tallest volume bars in the last 6 months. Check the dates. Were they news days, like earnings?
4. Find one breakout past a clear level. Was volume above or below its average that day?
5. Find one pullback in an uptrend. Was its volume lighter than the push before it?

Questions