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Volume

Even the most casual investor knows what matters about a stock—price. You are taught early on to buy low and sell high. The evening news tracks the major indexes as if they were horse races, so most people naturally believe that a higher close is good news and a lower close is bad; yet you are left none the wiser about navigating your own finances by knowing this daily result.

Price surely matters. But this is a market. Waiting for the final number on a given day or week tells you what happened but not why or, more importantly, how. Picture a mall parking lot. Is it full or half-empty? Is it Saturday or a workday? How many people are walking the shops and sitting in the restaurants? Regardless of what they buy or how much they pay, what matters to the investors of that mall is that customers are showing up and participating. For a smart trader, that’s understood innately as “volume.”


  

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