VOLUME-a basic element for stock trading decisions
In the trading world, it oftentimes is said that when it comes to the stock market, price is king, but volume is queen. One of the considerations that you must bear in mind when you are developing a stock trading strategy is the role that volume must plan in your portfolio management thinking process.
When it comes to a workable trading system and overall investment strategy, it is important to remember that high volume stocks tend to have a far better liquidity than there lower volume counterparts. As a result, when it comes to developing a profitable investment strategy, these high volume stocks tend towards having an advantageous entry and exit price for most people involved in stock trading.
Of course, in the final analysis, when it comes to any stock trading system, the ultimate result needs to be to fashion a stratagem that results in you having the ability to buy low and to sell high in the vast, vast majority of instances. (Naturally, due to the nature of the stock market, there will always be incidents in which you will be left having to sell below your purchase price due to an unexpected decline in value. However, and with that said, by adopting an investment strategy that turns towards high volume stocks, you can lessen the likelihood that you will face a devastating loss in the stock market.)
Finally, you do need to bear in mind that more often than not it is the high volume stocks that end up breaking out. In other words, it is these high volume securities that end up increasing dramatically in their value -- that end up breaking away from the pack. As a result, these high volume stocks can be a very profitable acquisition for a thoughtful investor involved in the stock market.