Volume: how much, and who took the initiative

Volume is the number of contracts traded over a period. It is the oldest data in market analysis, and yet the most misunderstood. A volume of 3,000 contracts says nothing on its own: you need to know whether that is a lot for that time of day, and above all who took the initiative for those 3,000 trades.

Every contract traded has a buyer and a seller. So volume cannot strictly be “buying” or “selling” volume. What can be is the initiative: was the trade triggered by a buyer in a hurry who paid the ask, or by a seller in a hurry who hit the bid?