High volume stocks signal that something important is going on within them and it is worth paying attention to. On Fyers One, we have a feature to display stocks whose volumes are unusually high. Often when above-average volumes are traded on the stock exchange, there can be a lot of volatility. It is a handy trading tool and if you observe trading volumes closely. Major volume spikes can signal unusual activity such as buying and selling of promoters, large funds, good or bad news for the company, or a complete change in investor sentiment. Considering the stock market is an information discounting mechanism, tools like this will really help you gauge why there is such unusual activity in the stock. Price action precedes real facts most of the time. You can use it to develop an eagle’s eye on the Indian stock market and modify your trading strategies accordingly.
Learn how to find unusually high volume stocks on Fyers One:
Click on “Tools” in the main menu and select “Unusual Volume”. This will show you the high volume stocks in NSE which can be segregated and filtered as per your search criteria.
As you can see in the image above, it shows the unusually high volume stocks. It starts with the list of stocks which have risen for the day and stocks which have fallen for the day are displayed below the horizontal separation. To get a larger number of stocks we have chosen Nifty 100 instead of Nifty 50.
You can choose to compare current trading volumes with high volume stocks based on:
• Average daily traded volumes of 1 week
• Average daily traded volumes of 1 month
The alerts of the high volume stocks are generated based on the following underlying parameters:
• Large Cap stocks – If volumes are 1.1 times the average daily traded volumes.
• Mid Cap stocks – If volumes are 1.5 times the average daily traded volumes.
• Small Cap stocks – If volumes are 2 times the average daily traded volumes.
So anyway, let’s understand the columns:
• Last - Real-time Last Traded Price (LTP)
• Chg - Price change of the stock over and above the previous day’s closing price.
• % Chg – Percentage change in stock price from the previous day’s closing price.
• T. Volume – Total traded volumes for the day calculated real-time.
• Avg Dvol –Average of historical daily volumes.
• % Above Avg Vol – Percentage figure of how much today’s traded volumes are in comparison to the average historical daily volumes.
You can choose to select stocks from:
• Over 30 stock indices
• Over 18 different major industry groups
• Small Cap stocks
• Mid Cap stocks
• Large Cap stocks
• All Cap stocks
How to interpret unusually high volume stocks:
High trading volume occur as a result of an anticipated reaction so it needs to be interpreted based on the circumstances. I will try to explain this with some examples.
Bullish Interpretation:
Example 1 - If the volumes are unusually high near the support levels then it can be interpreted as bullish since many investors are jumping in to buy the stock with the anticipation that the support levels might hold and the stock will proceed to go up in the future.
Example 2 – If a trending stock is trading near its 52 week high and the traded volumes are unusually high and at the same time the stock went up, it is more likely that it will continue to go up in price.
Bearish Interpretation:
Example 1 – If a stock is testing its previous all-time high and the traded volumes are very high in combination with a large bearish engulfing pattern, then most likely there will be a halt and there is a good possibility that the stock can turn bearish as investors have sold shares near the all-time high.
Example 2 – If a stock has just broken its support levels and the traded volumes the next day are very high compared to its average and this combined with a down day, signals an increasing chance that the stock might continue to trend downwards in the coming trading sessions.
Points to Note:
High volume stocks can be interpreted with great precision if you have a basic understanding of technical analysis. Candlestick chart patterns, trend lines and other ways to analyse stock trends can increase the odds of making money. You can also use this tool in combination with support and resistances for further confirmation. Also, if the increase in traded volumes is way too much, interpretation can change. If too many buyers load up at the same time, then there may be a temporary exhaustion.
Hope you use this effectively. Happy trading!