Inside Trade | Sizing it up – Trade Volume

Traders often tend to be complacent about certain things in the trade as longs as they gain profit. They often doesn't want to be bothered by, what they think as, irrelevant information but unfortunately that should not be the case. One of those neglected topic is the trading volume.

Trading volume is determined by the number of transaction and the amount that a trader is conducting on a certain period of time. The opened transactions in which will determine the profit or loss in the near future must be carefully weighed and assessed because it can make or break the trader himself.

A heavy volume implies a huge return of investment. But If the volume is too heavy, the capital may not be able to handle the weight thus crushing the capital in the process by means of a margin call. If the volume is too light, the chance to profit will be limited. The traders must determined the amount that he/she is willing to lose and how much the capital could support the weight of positions.