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Importance of Intraday Volume

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itsdubc asked 7 years ago
Hi Pat, Say we have an alert set on a stock to initiate a long position at $33. Midday if that stock breaks that $33 threshold, should we buy the stock based solely on the fact that it broke $33, or do we need to consider volume as well? If intraday volume is important, how do we assess volume intraday? It's easy to identify a pickup in volume on a daily chart during post-analysis but I'm not quite sure how to determine whether volume is higher than average during the day. Thanks!
2 Answers
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Pat Walker Staff answered 7 years ago

Chris,
Good question! I always take volume into consideration in the decision-making process. I look at the daily volume. As the stock is approaching the pivot or at the pivot I look at the daily volume, hourly volume, 30 minute volume. I want to see a surge or good pickup in volume vs. previous volume bars. I also want to see price going up also. Both variables are crucial. Naturally we'd hate to see volume picking up and price dropping! So, price going up and volume surging also on those lesser time frames. Hope that helps!
Sincerely,
Pat

itsdubc replied 7 years ago

Thanks Pat!

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Blake Kilpatrick answered 7 years ago
Pat,  what are your thoughts on this....there are thirteen 30 minute periods during the trading day, I will sometimes use what Is given by the market at the time to benchmark the volume.  For example, if we are 2 hours into the trading day we have 4 periods available to extrapolate out what the volume may be at end of day. If XYZ has an average volume of 1 million then I am looking for at minimum a 40% or greater increase above that.  Based on 13 periods the avg volume for that stock would be 76,923 shares per 30 min, if 4 periods into the day we are averaging 107,692 shares  then we are on track to be at a 40% Increase. In reality it isn’t as black and white as that but it has helped me determine if we are tracking at a good rate. Of course Marketsmith and investors.com also gives the rate without having to do the math.
Avatar photoOwen Staff replied 7 years ago

Hi Blake,
I just saw your addition to this post and sent it over to Pat; I’m sure he’ll respond shortly. The system generally notifies me when folks post in here, but I think what happened was your additional post was in the ‘answer’ section as opposed to the ‘comment’ section, so the system didn’t alert me. I know it’s been only a few days, but we try to better stay on top in here.
Owen

Avatar photoOwen Staff replied 7 years ago

Response from Patrick:

https://youtu.be/WA3_QJxVTWM