Volume action strategies

A factor that may play an important stock is trading volume. A high trading volume may indicate a lot of potential interest among investors, perhaps even some institutional buying. A typical example we can see here:

High volume

Here we can observe a high buying volume that has led to a significant increase in price afterwards.

Of course, it is not always the case: there is no guarantee that entering on the next day where the volume was high will lead to gains. We simply need a method to filter out the bad entries.

Therefore in our research, we made an attempt to analyse this issue more carefully and we developed three simple strategies that we call “Volume Action”, “Volume Action+” and “Volume Action++”.

The results of backtesting of these strategies are available here.

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