Trading volume refers to the number of shares (stock trading) or contracts traded during a defined period.
For a particular day, if trader 1 bought 1000 shares of stock X and trader 2 sold 2000 shares of the same stock, then the trading volume for that day would be equal to 3000 shares. The reason, the trading volume increased when trader 2 sold its shares, is that another investor actually bought these 2000 shares.
Trading volume is widely used by traders in technical analysis. It is an important measure of investors' sentiment regarding the market or the traded security.
Several reasons may explain spikes in trading volume for a particular stock; this includes earnings announcements, important news, and institutional activity (buying and selling of large blocks - block trades).
