MEDIOR · TECHNISCHE ANALYSE

Volume & Volatility Basics

Understand participation and range expansion without overfitting.

Bollinger Bands: volatiliteit meten, squeezes herkennen en mean reversion.

What Volume Tells You

Volume measures the number of units traded during a period. It represents participation - how many market participants are actively trading.

High volume on a move: Many participants agree on the direction. The move has "conviction."
Low volume on a move: Few participants are driving the move. It may lack follow-through.
Volume spike: A sudden surge in activity, often at turning points or breakouts.

Important caveat: Volume meaning varies by market. In spot crypto, volume includes wash trading. In futures, volume reflects contract turnover. In equities, volume is more standardized. Always consider the context of the market you're analyzing.

Volume Confirmation

Volume is most useful as a confirmation tool:

Breakout + high volume: More likely to be a genuine breakout.
Breakout + low volume: More likely to be a false breakout (no participation behind it).
Trend + increasing volume: Trend is healthy and attracting participants.
Trend + decreasing volume: Trend may be exhausting - fewer participants are joining.

What Volatility Tells You

Volatility measures the magnitude of price movements over time. It's not about direction - a market can be highly volatile while going nowhere (large swings within a range).

High volatility: Large candles, wide ranges, fast moves. Risk per unit of position is higher.
Low volatility: Small candles, narrow ranges, slow drift. Risk per unit is lower, but opportunities may be scarce.

Volatility Clustering

One of the most reliable patterns in financial markets: volatility clusters. Quiet periods tend to be followed by volatile periods, and vice versa.

Compression: When volatility contracts (small candles, narrow range), energy is building. A large move often follows.
Expansion: When volatility expands (large candles, wide range), the move is underway. Eventually, volatility will contract again.

This cycle - compression → expansion → compression - is one of the most tradeable patterns across all markets and timeframes.

Practical application: When you see a tight range forming (compression), prepare for a breakout. You don't know which direction, but you know a move is likely coming. This is when you set your alerts and plan your entries.

Measuring Volatility

Common volatility measures:

Tool	What it measures	Use case
ATR (Average True Range)	Average candle range over N periods	Position sizing, stop placement
Bollinger Bands	Standard deviation bands around a MA	Identifying compression (squeeze) and expansion
VIX (for equities)	Implied volatility from options	Market fear/complacency gauge
Historical Volatility	Standard deviation of returns	Comparing current vol to historical norms

When Low Volume Signals Are Unreliable

Holiday/weekend trading: Low participation makes price movements less meaningful.
Pre-market/after-hours: Thin liquidity can cause exaggerated moves that reverse at the open.
Low-cap assets: A single large order can move price significantly - volume doesn't reflect broad consensus.

Practice

Exercise

Find a compression range on any chart (a period of narrowing candles and declining volatility). Write down:

How long did the compression last?
What happened when it broke? (Direction, magnitude)
What would have invalidated the compression setup?

Key Takeaways

Volume = participation. High volume confirms moves; low volume questions them.
Volume meaning varies by market - always consider context.
Volatility clusters: compression precedes expansion.
Use ATR for sizing and stops; Bollinger Bands for squeeze detection.
Low-volume environments produce unreliable signals.

Wat zijn Bollinger Bands?

Bollinger Bands bestaan uit drie lijnen: een voortschrijdend gemiddelde (midden) en twee banden op 2 standaarddeviaties erboven en eronder. Ze meten volatiliteit.

Brede banden = hoge volatiliteit.
Smalle banden = lage volatiliteit (squeeze).
Prijs raakt zelden lang buiten de banden — het keert meestal terug naar het gemiddelde.

Bollinger Squeeze

Wanneer de banden smal worden, signaleert dit dat een grote beweging op komst kan zijn. De richting is niet voorspeld — alleen dat volatiliteit waarschijnlijk zal toenemen.

Belangrijkste punten

Bollinger Bands meten volatiliteit, niet richting.
Een squeeze voorspelt een toename in volatiliteit.
Prijs buiten de banden is niet automatisch een signaal om te handelen.
Combineer met andere indicatoren voor bevestiging.

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