If you want to have good results on the Stock Exchange, then you need to use several concepts and indicators in your allocation strategy, such as volume at price. One of the methods used by traders everywhere is Technical Analysis. Through this, it is possible to identify the best moment to buy or sell an asset, increasing the chances of success and reducing the risk of loss.
In technical analysis, one of the best-known indicators is Volume At Price (also abbreviated as VAP), which is responsible for showing the total trading volume at each price level. For this reason, this article is for you who every now and then get lost in the alphabet soup of the financial market or want to better understand how to use volume at price. Check it out below!
What we will see in this article:
What is volume at price (VAP)?
The volume at price or volume per price, in Portuguese, is a graph in horizontal histogram format to visualize the volume of accumulated trades by price level. It is a Technical Analysis indicator, it is possible to follow the possible areas of defense of the price and positioning of the players.
In a practical way, volume at price demonstrates the volume of shares traded at a specific price level. In most cases, it is used by traders in order to predict areas of support and resistance.
How to analyze volume at price?
Now comes the most boring part, but we guarantee that once you really understand, it will be much easier! The histogram bars run from left to right, starting on the left side of the graph. With this, the volume at price is represented in quantity of trades, to the right of the prices.
Visually, on the Profit Pro platform, you can check the buy bars in green and the sell bars in red. See the example below, since the selected period is from the opening of the trading session:
Price ranges with higher volume indicate greater interest in these price levels, while longer horizontal bars should be monitored for future support or resistance. Also, price breaking above a heavy volume bar indicates strength, this is because there was enough demand to break through resistance, i.e. overcome supply. The same goes for the reverse, when price breaking below a heavy volume bar indicates weakness, precisely because there was not enough demand to overcome supply.
By tracking this indicator until the end of the trading session, it allows the investor to observe whether the bars are growing or decreasing over the period. For this reason, it is recommended for anyone interested in having a more complete map of the market’s level of interest in asset prices, improving their investment strategy.
How to choose the best trading platform?
Choosing the best trading platform depends directly on how you operate and your goals. This varies greatly between traders. After all, what works for one may not fit the operating style of another. So, find out which one is yours.
With this, you will be able to know if it is worth hiring a trader platform – and you will be able to choose one. The use of different platforms can make it easier to make a decision, especially if your focus is on day trading, for example.
On the other hand, if your focus is not on day trading, but you still want to speculate in the market – as in the case of a swing trader, perhaps a traditional home broker is enough. That’s because these are operations that can be done with more peace of mind.
If you conclude that you don’t want to incur additional costs by hiring a platform or that you don’t need all the features, using a good home broker – such as BTG Pactual digital – may be what you need.
What are the main features and advantages of the platform for traders? Look here.
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