Technical Analysis - Trading Stocks Based on Volume

• 1). Keep track of the daily volume of any stock you are interested in buying (data is available real-time for a small fee from any brokerage or for free with a 15-minute delay). Aside from price itself, volume is the key indicator technical analysts use in charting and making their predictions about future price movements.
  
  
• 2). Use the volume data you are collecting and charting to decide when to buy the stock you are following. Say you have identified that the stock is trading in a classic "head and shoulders" pattern, for example, and has just reached the trough of the first shoulder. Based on the pattern, the price should start to climb to form the "head" relatively soon, and it is, therefore, a good time to buy the stock.
  
  
• 3). Use the volume data you are collecting and charting to make a decision when to sell a stock you are holding. Once you have identified a distribution pattern and/or other evidence of a top in your charts, and it looks likely that the stock price is entering a period of weakness, then sell your position in the stock.