What is high trading volume in a stock indicative of?

What do changes in the trading volume of a stock tell us?

• It seems that stock analysts, at least the ones on TV, are always talking about changes in the price of a stock, but rarely about changes in volume. What do changes in trading volume tell us? Is there any trading analysis methodology that takes volume and price into account, by, say, multiplying volume and price to look at the total change in market capitalization for a stock?

• Answer:

  You can do a lot of volume/price analysis on Metastock. It is hard to trade on a volume focus alone though, except for maybe blow off highs where both volume and the move up in the stock's price is very high. You can also look at conviction in the market such as how much volume is coming out on the downside, but this can be misleading because of issues like gapping and liquidity. Really in the end the main thing I got out of volume analysis was how liquid a stock is so I can get out if things go wrong. http://quintrade.blogspot.com.au