FAQs
How does the Volume Breakdown determine if a trade should be considered a buy (ask volume) or a sell (bid volume)? If the trade occurs at or above the ask price, it is considered a buy (ask volume). If the trade occurs at or below the bid price, it is considered a sell (bid volume).
What is the difference between bid volume and ask volume? ›
The bid size is the number of shares investors are trying to buy at a given price, while the ask size is the number of shares investors are trying to sell at a given price.
How does trading volume affect bid ask spread? ›
Several factors affect the bid-ask spread, regardless of the asset being traded. One of these factors is liquidity. Markets with higher trading volumes and more participants tend to have tighter spreads and greater liquidity.
What does trading volume tell you and what might it indicate to a buyer or seller? ›
Trading volume is one of the metrics that traders watch to predict the momentum of a stock or other security. An increasing trading volume might be a sign of favorable sentiment, indicating a likely price increase. A falling trading volume might indicate that the market is losing interest.
What is the bid ask volume indicator? ›
Bid Ask Volume Ratio shows the ratio of buying and selling volumes, smoothed by a moving average to better track trends. To add and set up the indicator, open the Indicators settings window.
How are bid and ask prices determined? ›
The bid price represents the highest price a buyer is willing to pay for the security, while the ask price represents the lowest price a seller is willing to accept. In the stock market, a buyer will pay the ask price and a seller will receive the bid price because that's where supply meets demand.
What if bid volume is higher than ask? ›
When the bid volume is higher than the ask volume, the selling is stronger, and the price is more likely to move down than up. When the ask volume is higher than the bid volume, the buying is stronger, and the price is more likely to move up than down .
Does volume indicate buy or sell? ›
Therefore, the volume is the total number of shares that were in action. It could be a buy order or a sell order. Volumes are high when stocks are actively traded. Similarly, volumes are low if the stocks are not actively traded.
How is trade volume calculated? ›
How is volume measured? Volume measures the amount that a financial asset changes hands during a given period of time. For stocks, volume is based on the number of shares traded and for futures and options volume is measured in terms of contracts.
How do you read a bid-ask volume chart? ›
The Bid/Ask Volume Cross study displays two lines. The green line is a five-bar running sum of the ask volume, which represent buying. The red line is a five-bar running sum of the bid volume, which represent selling. The Bid/Ask Volume Cross Oscillator is simply the difference between the green and red lines.
Depth of Bid/Ask indicator shows changes in the liquidity for a specified number of Bid/Ask levels. The indicator displays two lines — the sum of Bids and the sum of Asks — allowing you to visually assess the imbalance of liquidity between buyers and sellers.
What is the spread indicator for the bid-ask? ›
A spread indicator is a measure that represents the difference between the bid and ask price of a security, currency, or asset. The spread indicator is typically used in a chart to graphically represent the spread at a glance, and is a popular tool among forex traders.
Should I buy at ask or bid price? ›
The average investor contends with the bid and ask spread as an implied cost of trading. Most investors and retail traders are "market takers," meaning that they usually will have to sell on the bid (where someone else is willing to buy) and buy at the offer (where someone else is willing to sell).
What is the big difference between bid and ask? ›
Typically, an asset with a narrow bid-ask spread will have high demand. By contrast, assets with a wide bid-ask spread may have a low volume of demand, therefore influencing wider discrepancies in its price.
How do you calculate bid volume? ›
Formula. Bid Volume = Number of contracts traded at the Bid.
What is the difference between bid and ask price limit order? ›
A limit order allows you to choose your entry point instead of accepting the current market price. A limit order can narrow the bid-ask spread. If the bid price was $5.10 and the ask price was $5.13, you could look to enter a long position at $5.11 and wait for your order to be filled.
