Chart School / Reading Charts
Volume and liquidity
Lesson 6 of 14 · about 1 min read, plus practice · Glossary
Volume counts traded units during a period. Liquidity concerns how readily a transaction can occur without substantially changing price. High volume and deep order books are related concepts, not interchangeable measurements. Volume depends on the venue and product: a crypto exchange is not the entire crypto market. Zero volume can be a valid observation. Missing volume is unknown, not automatically zero. A volume increase can support interest in a move without identifying who traded or guaranteeing continuation.
Worked fictional example
Fictional River trades 500 units, then records zero volume for a complete period, then trades again at a higher price. The zero is valid if the source confirms no trades; it does not establish easy execution.
On a small screen, scroll the chart horizontally to read every label.
Observation order / daily periods →
Accessible data table and chart description
Separate fictional daily OHLCV illustration for Volume and liquidity. Hollow body: close at or above open; filled body: close below open. Table provides exact values.
| Date UTC | Open | High | Low | Close | Volume |
|---|---|---|---|---|---|
| 2024-01-01 | 10 | 11 | 9 | 10 | 100 |
| 2024-01-02 | 10 | 11 | 9 | 10 | 120 |
| 2024-01-03 | 10 | 11 | 9 | 10 | 0 |
| 2024-01-04 | 10 | 11.5 | 9 | 10.5 | 160 |
| 2024-01-05 | 10.5 | 11.5 | 9.2 | 10.2 | 180 |
| 2024-01-06 | 10.2 | 11.4 | 9.2 | 10.4 | 200 |
Legend: hollow body = close ≥ open; filled blue body = close < open. Wick = low to high. Direction is also readable from the table, without color.
What could invalidate this interpretation?
A claim that a volume spike confirms a durable trend fails if later prices reverse or the source covers only a narrow venue.
A counterexample
A heavily traded session can still contain wide spreads and sharp price changes during a stressed market.
Check your understanding
Further learning
Original FinanceFD explanations and drawings. For additional context, see Fidelity’s overview of technical analysis, Fidelity’s RSI guide and Investor.gov’s investing introduction.
Learning progress
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