In the world of investing, some rely on news, others on technical indicators, but there exists a timeless secret that has proven effective through decades: understanding the flow of money through trading volume. No need to join exclusive groups or pay hefty fees—just grasp a few fundamental principles, and investors can see through the intentions of major players and the market itself. Here are five classic rules on the relationship between price and volume, distilled from experienced traders:
1️⃣ Strong Rise – Slow Decline → Big Money is Accumulating 🍚
When the market shows a strong bullish candle, followed by only slight price corrections with decreasing volume, it is not a bad sign. On the contrary, this signals that large capital is quietly accumulating.
Gentle pullbacks, “soft as a cat’s paw,” indicate weak selling pressure and continued control by buyers. When the table is still set, don’t leave too soon—the big waves often start in silence.
2️⃣ Sharp Drop – Weak Recovery → Money is Fleeing 💦
If prices suddenly drop 10–15% and recover only 2–3%, it’s a clear sign that capital is withdrawing. Any attempt to “catch the bottom” at this point is like trying to scoop water from a burst dam—high risk, low reward. The best approach is to step aside, observe, and preserve capital, as the market can turn cold faster than expected.
3️⃣ High Volume at the Peak ≠ True Peak; Only Exit When Volume Declines 📉
Heavy volume at high price levels does not necessarily indicate an imminent reversal. Many traders are misled by long candlestick wicks and rising volume.
As long as money is still flowing, prices can continue to swing aggressively. Only when volume suddenly falls silent—signaling capital withdrawal—is it the right moment to exit.
4️⃣ Single High Volume at the Bottom = Trap; Continuous High Volume = Real Bottom 💍
After a deep drop, a single spike in volume does not guarantee a trend reversal—it is often a technical bounce trap.
In contrast, multiple consecutive sessions with high volume while prices remain stable or gradually rise indicate strong capital returning, akin to a lasting “marriage” between price and volume.
5️⃣ Charts Can Lie, Volume Doesn’t 💓
All technical indicators can be manipulated to look appealing, but volume is the true heartbeat of the market. When red and green bars fluctuate strongly, it reflects investors’ psychological shifts. If volume and price move in sync—follow; if out of sync—step aside. Price can be an illusion, but volume reveals the truth.
📘 Conclusion
Price shows the surface; volume reveals the essence. By understanding the relationship between these two factors, investors no longer chase news or emotions but can observe the “breath” of the market objectively and accurately.
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