1. Definition and Representation: In stocks, 'Volume' refers to the trading volume indicator in the stock market, used to represent the amount of transactions for a particular stock or the market over a period of time. It is typically represented using a bar chart, where the corresponding coordinate value of the bar indicates the transaction amount at that time. If the closing price on the trading day is higher than the closing price of the previous trading day, the volume bar will appear red; conversely, it will appear green.
2. Market Activity Level: The size of the volume directly reflects the level of market activity. When the volume increases, it indicates that more traders are participating in the market, and the buying and selling atmosphere is strong, which often suggests that the market may experience significant fluctuations soon. Conversely, if the volume shrinks, it indicates relatively weak buying and selling power in the market, and investors may adopt a wait-and-see attitude towards the stock or market.
3. Trend Confirmation: Volume can also be used to confirm the strength of market trends. During a price increase, if the volume is also continuously increasing, it usually indicates strong buying power, and the upward trend in price may be further confirmed. Conversely, if the price is rising but the volume is decreasing, or if the price is falling but the volume is increasing (the so-called 'volume-price divergence'), this may indicate a potential reversal in market trends.