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Therefore, the unit of measurement for average volume is shares per unit of time, typically per trading day. The volume of trade is a measure of the market's activity and liquidity during a set period of time. Higher trading volumes are considered more positive than lower trading volumes because they mean more liquidity and better order execution.
Volume analysis is used to confirm and predict price directions. [3] The theory behind volume analysis rests primarily on the assumption that a high trade volume signals market consensus behind the corresponding movement in price, and thus that the trend in price is likely to continue. [5]
Volume percentages for all individual currencies should add up to 200%, as each transaction involves two currencies. Trading in the euro has grown considerably since the currency's creation in January 1999, and how long the foreign exchange market will remain dollar-centered is open to debate.
The definitions and methodological concepts applied for the various statistical collections on international trade often differ in terms of definition (e.g. special trade vs. general trade) and coverage (reporting thresholds, inclusion of trade in services, estimates for smuggled goods and cross-border provision of illegal services).
Volume-weighted average price (VWAP) balances execution with volume. Regularly, a VWAP trade will buy or sell 40% of a trade in the first half of the day and then the other 60% in the second half of the day. A TWAP trade would most likely execute an even 50/50 volume in the first and second half of the day. [3]
In finance, volume-weighted average price (VWAP) is the ratio of the value of a security or financial asset traded to the total volume of transactions during a trading session. It is a measure of the average trading price for the period. [1] Typically, the indicator is computed for one day, but it can be measured between any two points in time.
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Market Profile Tools to Support Trading Decisions; Liquidity Data Bank Volume Analysis; Volume is said to identify signs of continuation or change, to infer the directional facilitation of trade, but "volume data, by itself, is meaningless". The reason given is that "it is essential to know what market participants are doing".