Sometimes confused with uptick volume, up volume is a term that is used to describe the movement of a stock’s volume when the share price at the end of the trading day is higher than at the beginning of that same trading day. This is in contrast to down volume, in which the price of the shares is lower at the end of the day than at the beginning of the day. Both terms allow for a series of up and downward movements throughout the course of the day, but focus only on the status of the price at the time the market closes for that day.
While the up volume and the uptick volume are very similar, there is one key difference. Uptick volume also has to do with the upward movement of stock prices, but focuses on that movement from one instance to the next. In contrast, the up volume compares the price at the start of the day with the price at the end of the day to determine if any increase has occurred. This means that a given stock may experience an uptick volume during the morning, but experience a decrease, or downtick volume, in the afternoon that partially offsets the gains. If the series of upward and downward movements throughout the trading day result in the price being higher at closing time, then up volume has been achieved.
Investors sometimes look closely at the up volume associated with a given option as one means of understanding how the investment responds to different events within the marketplace. By comparing days when up volume is achieved with days when the stock experienced down volume, it is possible to identify what happened on those days to influence the prices, and how long it took for the impact of those events to wane. This in turn provides important information that the investor can relate to projected events in the market, and decide if now is a good time to buy, sell, or hold the security in question.
While assessing the events that lead to the up volume of a given stock is helpful, investors do not rely on this data alone. Choosing to consider other factors that relate to the marketplace makes it possible to refine projections of what will happen with the stock price in both the short and long term. By combining the information received from evaluating the up volume with other available date, the chances of forming an accurate projection of market movements is enhanced, and the investor is more likely to earn a return from his or her investment decisions.
