Chapter 28 · Volume Indicators
Volume in practice, and the NEPSE floorsheet
What volume confirms, what it cannot, and the trade-level data Nepal publishes that most markets do not.
Price up, volume not confirming
Volume is the only input on a chart that is not derived from price. That is what makes it worth reading — and what makes it the first thing to check when a price move looks convincing.
The four situations worth recognising
| Price | Volume | Reading |
|---|---|---|
| Rising | Rising | Advance supported by participation |
| Rising | Falling | Advance running on thin interest — the classic warning |
| Falling | Rising | Selling with conviction |
| Falling | Falling | Supply drying up; often the healthy part of a pullback |
Always compare a stock's volume with its own 20-day average. An absolute number tells you nothing: 50,000 shares is enormous for one company and negligible for another.
Worked: a breakout that should not be trusted
| Day | Close | Volume | vs 20-day average |
|---|---|---|---|
| Breakout | Rs 512 | 38,000 | 0.7× |
| Next | Rs 508 | 21,000 | 0.4× |
| Next | Rs 495 | 96,000 | 1.8× |
- The breakout came on below-average volume — the level was crossed because nobody was defending it, not because buyers pressed.
- The failure came on 1.8× volume. The heavier commitment was on the downside.
- Volume told you which of the two moves was real, and it did so before the price did.
The floorsheet: Nepal's genuine data advantage
NEPSE publishes a floorsheet of every executed trade, with the buying and selling broker codes. Most retail investors in other markets never see anything below an aggregated volume bar.
| What you can see | What it can suggest |
|---|---|
| Number of transactions vs total quantity | Average trade size — a few large trades or many small ones |
| One broker heavily on one side | Concentrated interest, though the client is not disclosed |
| The same two broker codes trading repeatedly | Possible transfer between related accounts rather than open-market demand |
| Quantity concentrated in the last minutes | Positioning at the close |
Indicators worth having, and in what order
- 1Volume against its own average — the simplest, and the one most worth building the habit of checking.
- 2VWAP — the average price actually paid, weighted by size. A level participants measure themselves against.
- 3Accumulation/Distribution — weights each day by where the close sat in the range, so it is better behaved than OBV.
- 4OBV — coarse by design: a stock up 0.05% adds its entire day's volume. Famous, and the crudest of the four.
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