Decoding Derivatives Volume – Your Secret Weapon for Market Mastery
Derivatives, sophisticated financial contracts tied to underlying assets, serve dual purposes in markets: hedging against risks and speculative trading. While price movements are fundamental, they often lack context on market conviction.
Volume analysis reveals market dynamics, strength, and liquidity. High trading activity signals strong conviction, while low volume suggests weak participation. This metric acts as the fuel driving price movements, offering traders deeper insights beyond chart patterns.