If you’ve been watching the markets this week, you may have noticed something interesting.
Even on days when prices didn’t move much, trading volumes suddenly jumped in several stocks and indices.
This often leads to a common assumption:
“If volumes are high, something big is about to happen.”
That’s not always true. Let’s break it down.
1. Volume shows activity, not direction
High volume simply means more participants are trading.
It does not automatically mean prices will go up or down.
Volumes can rise due to many reasons:
• News or rumours
• Portfolio rebalancing by institutions
• Derivative expiry effects
• Short-term profit booking
2. Why volumes have been higher recently
This week, markets have been digesting global cues, policy signals, and recent sharp moves.
When uncertainty increases, participation usually increases too.
Some investors hedge, some exit, and others enter. That push and pull shows up as higher volume.
3. How experienced investors look at volume
Instead of reacting to volume alone, they combine it with:
• Price movement
• Broader market trend
• News context
For example, rising volume with no price movement often signals indecision, not opportunity.
4. A simple takeaway for retail investors
Volume is a supporting signal, not a decision-maker by itself.
Treat it as a clue, not a conclusion.
Understanding what volume can and cannot tell you helps avoid overtrading and emotional decisions.
What about you?
When you see a sudden volume spike, do you get curious, cautious, or excited to act?