Weekend Market School

Today's Lesson: Volume Analysis

1. What is it?

Volume is a measure that shows the total amount bought and sold of a security within a certain time period. Let's make an analogy: Consider the stock exchange as a marketplace, and the stock price as the price tag of a product sold in that marketplace. The more a product is sold (i.e., the higher the volume), the more clearly the intensity of demand and interest for that product is understood.

Beyond this simple analogy, volume is the "confirmer" of price movementis. While price moves in one direction, increasing volume in the same direction shows that the participation behind that movement is strong, meaning more investors share the same view. In the opposite case, if price rises while volume falls, this rise may be "weak", meaning only a small number of speculators are setting the direction.

Definition: Volume analysis is a branch of technical analysis that evaluates the sustainability and reliability of these movements by measuring the buying-selling activity underlying price changes.

2. Why is it important?

1. Verification Mechanism – When price starts a trend, volume shows whether that trend is "real" or "temporary". Increasing volume in an uptrend shows that the trend is supported by participants, and therefore the probability of continuation is high.

2. Reverse Signal Generation – If volume decreases while price rises, this signals "exhaustion". Similarly, if volume increases during a decline, it means selling pressure is strengthening and the price may move further downward.

3. Entry‑Exit Timing – Volume spikes typically occur at "breakout" (breakout) and "breakdown" (breakdown) moments. Capturing these moments makes decisions to open or close positions safer.

4. Measuring Market Sensitivity – High volume indicates that the market's sensitivity to that stock has increased, and that the impact of external factors such as news, reports, or macro data is being felt by a broad investor base.

This information enables especially novice‑to‑intermediate investors to move beyond the notion that "price is just a number" and to also consider the participation behind the move.

3. How to Read / Use?

a) Basic Volume Bar

• Chart: The bars show the total number of buy‑sell transactions for each trading day.

• Interpretation: If the bar is high, it means a heavy volume of trading occurred that day.

b) Volume‑Price Relationship

• Monitoring: Check whether the bars also rise when the price rises.

• Decision:

• Rising volume in an uptrend → Trend confirmed

• Declining volume in an uptrend → Weak trend, reversal possible

c) On‑Balance Volume (OBV) Formula

OBV_t = OBV_{t‑1} + \n { +Volume_t if Price_t > Price_{t‑1}\n -Volume_t if Price_t < Price_{t‑1}\n 0 if Price_t = Price_{t‑1} }\n

• How to obtain?

• Price_t andPrice_{t‑1}: Daily closing prices (example: ASELS closings).

• Volume_t: That day's total trading volume (from the BIST 30 "Volume" tab).

OBV sums volume according to price direction; a rising OBV shows an uptrend supported by buyers with volume, while a falling OBV shows seller pressure.

d) Volume Oscillator (VO)

VO = (Short‑term Volume Average – Long‑term Volume Average) / Long‑term Volume Average × 100\n

• Short‑term Average: 5‑day moving average (MA5).

• Long‑term Average: 20‑day moving average (MA20).

Positive VO indicates that short‑term volume is above the long‑term average, meaning "volume increase".

e) Application Steps

1. Open Chart – Select the stock to be examined within BIST 30 (example: ASELS).
2. View Price and Volume Bars – Enable volume bars below the price chart.
3. Draw Trend – Add 20‑day moving average (MA20); the price's position relative to MA20 indicates trend direction.
4. Draw OBV – " Add OBV from the "Indicators" menu. Check whether OBV moves in parallel with price.
5. Calculate VO – Open the platform's "Volume Oscillator" indicator; note positive/negative crossovers.
6. Decide –

• Price rising + OBV rising + VO positive → Buy signal.

• Price rising + OBV falling + VO negative → Caution, reverse signal.

4. Real Example

Example Stock: ASELS (ASELSAN)

• Price change over last 30 trading days: -14.2%

• Price range: 322.25 TL – 393.75 TL

Step 1: Examine Price and Volume Chart

In the chart, as price rises from 322.25 TL to 393.75 TL, volume bars generally low are observed. Then, when price pulls back from 393.75 TL to 322.25 TL, volume bars show a clear increase show.

Step 2: Look at OBV Direction

• Price rise (393.75 → 322.25 TL) during OBVdecline follows the trend.

• Price fall during OBVis rising.

This,that the decline is supported by strong volume from buyers (sellers) shows; i.e., the price's downward movement occurred with a "real" selling pressure.

Step 3: Volume Oscillator (VO) Analysis

VO, during the decline period12% takes a positive value around (short-term volume average above long-term average). This alsothe volume increase is parallel to the price decline confirms that.

Step 4: Comment

• Low volume on the rise → The rise is speculative, with low sustainability.

• Increasing volume on the decline → It means that sales are supported by a wide investor base, indicating that the trend is strong.

In this case, ASELS for the price's 14.2% decline in the 30-day period, occurring together with volume, the trend can be said to be "real" and "strong". Investors, in a similar scenario, can expect the decline to continue or evaluate it as a short-term "dip" opportunity.

Note: The volume data used here is based on the visual size of the bars on the chart; it is recommended that exact figures be taken from the "Volume" tab on the platform.

5. Common Mistakes

6. Mini Test

Question 1: If volume bars are also increasing while price is rising, what does this indicate?

Answer: It shows that the trend is strongly supported by buyers, meaning the uptrend is sustainable.

Question 2: What does it mean when OBV moves in the opposite direction to price?

Answer: It means that while price is moving in one direction, volume is concentrating in the other; this generally shows that the trend is weakening and the risk of reversal is increasing.

Question 3: When the Volume Oscillator (VO) crosses from negative to positive, what possible scenario is expected?

Answer: The short-term volume average crossing above the long-term average, i.e. experiencing a "volume increase"; this is generally a signal that the price movement is confirmed.

7. Summary

• Volume, It is a basic indicator showing the buying‑selling participation behind the price movement.

• Increasing volume on the rise, that the trend is strong and sustainable, Increasing volume on the decline indicates intense selling pressure.

• OBV andVO such formulas allow us to evaluate volume quantitatively; they should be interpreted together with price.

• ASELS for example, the price decline was supported by high volume, which demonstrated that the trend is real and strong.

• Common mistakes include interpreting volume alone, treating high volume as an automatic buy signal, and over‑relying on single‑day spikes.

8. Deepening

1. On‑Balance Volume (OBV) Details – Learn the divergence (price‑OBV mismatch) analysis of OBV.
2. Chaikin Money Flow (CMF) – Generate more sensitive signals by combining money flow with volume.
3. Volatility and Volume Relationship – Examine the correlation between volatility (VIX) and volume.

Practical Pages:

• Technical Scan → " Find high‑volume stocks using the "Volume > Average Volume" filter.

• Stock Page (ASELS) → Practice analysis by adding daily volume bars, OBV and VO indicators.

This lesson is for educational purposes, not investment advice.