What is a net volume?
Given the financing, the net volume concerns the difference between the increase in security and its decline in the period. In the net volume formula, the volume of increases is the part of the trades in which the price price is higher than the price of the previous trade, while the volume is this amount of trades at which the price is lower than the previous trade. The net volume, which is calculated by deducting the volume of UPTICK volume, is one of the many tools that investors use for technical analysis of securities. A pure volume study helps to identify and monitor trends on the market. The net volume further measures the force down or ascending trend.
In deciding on investment, investors are involved in two basic methods of analysis - technical and basic. Basic analysts examine the company products, services, balance sheet, cash flow and other information specific to the company in order to determine the actual value of shares of the companythose. Investors who follow the style of basic investment analysis want to invest in shares traded at an undervalued price based on their analysis. On the other hand, technical investors use to determine the shares in which you can invest. Technical investors are based on the principle that the market price of shares always shows the actual value of shares and takes into account the comprehensive combination of business management, performance, supply and demand and psychology of investors, which plays a role in market prices.
The net volume critically confirms the trends and graph patterns. Movements, whether up or down, are perceived as relevant and stronger if they are accompanied by an increase in volume. The net volume should correspond to the trend to occur in conjunction with the increasing net volume. If the price and volume do not follow each other, for example, when the price is defined with a decrease in volume, the resulting divergence serves as a potential indicator of the upcoming changes in the trend. In general, changesIt precedes the price changes.
The money flow index (MFI) is similar to the net volume of indicating the momentum on the market. To measure the intensity of investors' beliefs in the current trend, it also uses price and volume. Investors can calculate MFI by determining the ratio of a positive money flow divided by a negative flow of money. The MFI range runs from zero to 100, with the values below 20 indicate undervalued supplies that have been sold. Conversely, the values of MFI above 80 points per excessive value, the reunion of shares that are likely to experience price correction in the near future.