Reading market structure · Lesson 3 of 3
Volume and liquidity context
Add participation and depth to your read.
8 minute read
Participation and depth
A price move with higher reported volume can be interpreted differently from a move on low activity, but volume is venue- and market-specific and does not prove a trend will continue.
Liquidity around your specific price, reflected in depth and spread, matters as much as the headline volume number, especially when sizing a position in a less liquid asset.
Key takeaway
Use these concepts to understand the market, not to assume a particular outcome. Always define uncertainty and risk before making a decision.