Video: Volume Analysis in Trading: The CORRECT Way to Read the Market
Creator: Mind Math Money
Original Video: Watch the original video
Difficulty: Beginner
The Big Idea
Price shows the path of the quoted market; traded volume adds a measure of activity behind that movement. Mind Math Money recommends reading both rather than relying only on candle shape and demonstrates displaying volume as bars or as candle-color intensity.
Volume adds context, not a verdict. A large volume bar does not guarantee continuation, prove that institutions agree with a price, or establish that a breakout will hold. The important task is comparing relevant observations on a consistent feed and timeframe.
What Volume Counts
For an exchange-traded futures contract, volume counts contracts traded during the interval. It is not the number of unique traders and does not directly count how many people support a direction. A participant can trade many contracts or trade repeatedly.
Every executed transaction has both a buyer and a seller. A green candle with high volume means that many units traded while price finished above its open. It does not imply that the market contained more buyers than sellers. Identifying aggressive buying versus selling requires additional trade classification, not just candle color.
CME’s volume definitions distinguish contract volume from open interest, the contracts still outstanding. A high-volume session does not necessarily mean the same increase in outstanding positions. Ordinary volume also differs from order-book depth, which concerns displayed resting orders.
Two Equal Candles Can Have Different Activity
The source compares similarly sized bullish candles with very different volume and calls the higher-volume one more meaningful. A more careful interpretation is that it occurred with more recorded trading activity. Whether that makes it a better entry depends on location, liquidity, and what happens next.
In an original example, two fifteen-minute candles each rise ten points. One records 2,000 contracts; the other 12,000. The second represents six times the traded quantity. It may show broad active participation, but it could also reflect heavy two-way disagreement. If price repeatedly fails to advance despite high volume, that is a different observation from clean continuation.
Low-volume movement is not automatically invalid. Price can move through thin liquidity with little trading. Volume alone does not reveal whether the next bar will reverse.
Normalize the Comparison
Raw volume depends on interval length, instrument, contract, venue, and time of day. The video notes that overnight activity can be lower and opening or closing bars can be high. Comparing an opening bar directly with a quiet overnight bar may mostly reveal the session schedule.
| Comparison | What it answers | Main limitation |
|---|---|---|
| Raw volume | How many units traded in this interval? | Does not adjust for normal activity at this time. |
| Volume divided by a preceding rolling average | How active is this bar versus recent bars? | A session transition can distort the comparison. |
| Same-clock-slot comparison across prior sessions | How unusual is activity for this time of day? | Requires session alignment, enough history, and holiday handling. |
For example, 12,000 contracts divided by a recent average of 4,000 is 3.0 times recent activity. If the normal opening-slot average is 15,000, however, it is only 0.8 times that same-slot baseline. Neither ratio is wrong; they answer different questions.
Check the Data Before Interpreting It
The source describes futures volume as complete. That should be qualified by the specific contract and data feed: exchange-reported volume is centralized for the relevant listed instrument, but not a complete measure of every economically related market. An index future, its micro counterpart, options, ETFs, and cash equities are distinct instruments.
Contract rollover can move activity between expiries. A continuous chart may also stitch different contracts together, so verify the platform’s construction before comparing a long volume history. Venue coverage, delayed data, and corrections can affect what the chart displays.
For stocks, examine whether the feed represents consolidated activity or a subset of venues. Spot forex has no single global exchange volume total; a feed may report tick activity instead. Crypto volume is typically specific to the exchange and product being viewed. Do not interpret all these fields as the same unit.
Reading Volume With Price
Define a specific question rather than assuming “more is better.” At a range boundary, record the close location, volume relative to an appropriate baseline, and whether later price accepts or rejects the break. At support, distinguish an active rebound from heavy trading with no upward progress.
Use completed bars for comparisons that depend on full-bar volume. An unfinished bar has had less time to accumulate activity. If evaluating developing volume, model elapsed time explicitly rather than comparing it as if the interval were finished.
The video promotes a member-only volume-strength candle indicator. Its coloring can reduce clutter, but the transcript does not give the exact normalization formula. A bright candle is still a visualization of data, not a standalone buy or sell instruction.
Pine Script: A Transparent Relative-Volume View
Show Pine Script – confirmed relative volume
//@version=6
// Guide: https://candlechasers.com/volume-price-participation-relative-context/
// Educational visualization, not the creator's member-only indicator.
indicator("CandleChasers - Confirmed relative volume", overlay=false)
length = input.int(20, "Prior-bar volume average length", minval=2)
strong = input.float(1.5, "High relative-volume threshold", minval=0.1)
colorCandles = input.bool(false, "Also color confirmed price candles")
averageVolume = ta.sma(volume, length)[1]
relativeVolume = not na(volume) and averageVolume > 0 ? volume / averageVolume : na
confirmedRelative = barstate.isconfirmed ? relativeVolume : na
directionColor = close > open ? color.green : close < open ? color.red : color.gray
strengthColor = color.new(directionColor, relativeVolume >= strong ? 0 : 70)
plot(confirmedRelative, "Volume / preceding average", style=plot.style_columns, color=strengthColor)
hline(1, "Prior-average baseline", color=color.gray)
hline(strong, "Research threshold", color=color.orange)
barcolor(colorCandles and barstate.isconfirmed and not na(relativeVolume) ? strengthColor : na)
highActivity = barstate.isconfirmed and relativeVolume >= strong
alertcondition(highActivity, "Confirmed high relative volume", "Completed-bar volume exceeded the chosen prior-average multiple. Not a trade signal.")
var table status = table.new(position.top_right, 1, 1)
if barstate.islast
table.cell(status, 0, 0, na(volume) ? "No volume on this bar" : na(relativeVolume) ? "Need positive prior volume and enough history" : "Prior-bar baseline; not time-of-day normalized", text_color=chart.fg_color)
This indicator divides completed-bar volume by the average of the preceding bars, excluding the current candle from its baseline. Green and red reflect candle direction; stronger colors mark a chosen activity threshold. This is an original educational visualization, not a recreation of the creator’s paid indicator.
The baseline includes whatever sessions are present on the chart and is not time-of-day adjusted. Missing volume or a nonpositive baseline produces no relative value. The live unfinished bar is intentionally blank; optional price coloring also waits for confirmation. The code uses no higher-timeframe requests, future pivots, or backdated signals. Alerts should run once per bar close. This is an indicator with no Strategy Tester trades, and it has not been compiled in TradingView here.
Test Whether Volume Improves Your Actual Setup
- Compare a fixed price-action model with and without a predefined volume condition on the same candidate opportunities.
- Compare a rolling baseline with a separately implemented same-time-slot baseline; include low-activity and high-activity sessions.
- Separate instruments and session segments rather than pooling incompatible raw volume units.
Record net expectancy, drawdown, candidate count, accepted and rejected trades, costs, and changes in fill quality. Do not choose a threshold because it highlights past winners. Reserve later data for evaluation and preserve losing high-volume examples.
Final Takeaway
Volume describes recorded trading activity, not certainty or the number of people agreeing with a move. Compare it within the correct instrument, session, and baseline, then test whether it improves a clearly defined price setup.
Risk Disclosure
This article and code are educational, not financial advice. Trading can cause substantial losses. High volume, relative-volume thresholds, and candle colors do not guarantee direction or executable liquidity. Historical tests depend on data coverage, session definitions, contract changes, costs, slippage, gaps, and market conditions. Past results do not guarantee future outcomes. Validate data and risk assumptions before considering live use.
CandleChasers independently interprets this source and is not affiliated with or endorsed by Mind Math Money. Product claims belong to the creator; the examples and relative-volume indicator are CandleChasers’ own educational work.