Stock volume alerts are generated when the number of shares traded in a particular stock meets some desired threshold. An alert may be set to track unusually high or unusual low activity in the number of new shares being bought or sold. To an investor or a trader, it is important to know what stock volume alerts are and how to interpret them because it can be a catalyst for market-oriented moves, or shifts in the mind of the investing crowd.
Changes in trading volume relative to a stock’s usual patterns of activity, which might signal increased demand or worry – which could be leading indicators of price changes – should also be heeded. In general, stocks experiencing high absolute trade volume are considered to have lots of liquidity, and thus are more likely to absorb large trades without greatly affecting the stock’s price. Consequently, setting up effective volume alerts is an essential tool for active market participants.
Investors – and traders, in particular – keep a close eye on stock volume. There are several reasons why this statistic is so important for today’s investors. The primary reason is that stock volume is considered a proxy for market temperament. Since volume levels typically coincide with strong buying and selling pressure, it is frequently indicative of what lies ahead for share prices. For instance, significant volume increases in the number of shares traded could indicate that the company is being widely discussed among investors who see it as either undervalued or a strong buy. On the other hand, quiet uneventful periods could indicate that interest in the stock may be about to decline.
Watching volume trends can help investors interpret the energy behind price moves. If a stock is rising with increasing volume, that suggests robust accumulation that may be sustainable. On the other hand, if stock is rising with decreasing volume, that could indicate weakening momentum. Thus, watching stock volume can help investors make better decisions by providing insight into market behavior not gleaned from price alone.
Setting up stock volume alerts is an easy way to improve your trading strategy and stay up to date with market movements. Just follow these simple steps: Choose a trading platform or financial software with customisable alert features. Once logged in, look for a section on notifications or user preferences under the account settings. There, you can configure the alert’s conditions – for example, minimum and maximum volumes traded, or signals for specific stocks.
You can also choose to receive notifications by email, SMS, or with push notifications to your mobile phone. Save and test your settings to make sure the Kite setting was correct. Then track your the number of trades, number of winners, pips won, number of losers and pips lost. The market is highly volatile and things change rapidly, so you may need to regularly review and tweak the parameter settings to maximise performance. In this way, you stay ahead of the big market moves and tend to do so with less effort.
Interpreting stock volume alerts (by Google Finance) can be important in making strategic investment decisions. In general, a very large spike in the trading volume of a stock can indicate much higher-than-usual interest from investors, or potentially even some kind of newsworthy development. If volume of a stock goes up significantly while the price increases, it can signal passionate buying interest, and may indicate a bullish outlook. Alternatively, if a stock's price drops while the volume is elevated, that can indicate aggressive selling interest, and possibly bearish sentiment.
But the caveat is that context matters. The increase in volume really needs to be analysed in relation to other indicators such as moving averages and the relative strength index (RSI) that can help to confirm the trend. In the first situation, high volumes as a result of good earnings reports or positive market conditions would confirm the validity of the signal. In the second case, when there are no indicators to confirm it, a spike in volume could just reflect a burst of volatility unrelated to the financial fundamentals of the company and simply express an influx of short-term traders and investors wanting to take advantage of an opportunity.
In the end, however, understanding what’s going on behind them can help investors see the difference between good signals and merely good noises, so they can be more strategic in how they approach them.
Stock volume alerts actually work best integrated into a broader trading strategy. Set parameters appropriate to your objectives and risk tolerance. Alert yourself to large volume increases that might signal a breakout or reversal; do not get distracted by minor fluctuations. Also, in most cases you should understand why an alert happened; high volume can be driven by earnings announcements, market news or institutional trades.
Alerts that trigger a large volume of shares also benefit from being validated with a separate technical indicator, such as a moving average or a relative strength index (RSI) reading. Using alerts effectively will also entail periodically examining and modifying the alerts in response to changing market conditions and your personal trading performance statistics. By doing so, stock volume alerts can be an invaluable resource in helping you trade the markets more effectively and profitably.