The phrase “down volume” is used to describe the downward change in a stock price as determined from one day to the next day.
For example, whenever a particular stock closes the day having ended at a price that is lower than the closing price on the day before, which is sometimes known as “closing in negative territory”, that day’s share volume is known in the financial industry as a “down volume.” It is, as should be obvious, the opposite of an “up volume,” which is the related term meaning that the stock has increased in value from the close of one day to the close of the next.
Market analysts will often compare down volumes with corresponding up volumes and use this information to seek out important signals that will indicate the most profitable and wise times to buy and sell stocks. This is because the volume of the stock can be used as an indicator to confirm changes in stock prices and moving averages.
A change in price by itself may have very little meaning over the long term in the markets. This is why indicators such as down volume and/or up volume take on a special sense of significance for those who are interested and invested in the stock market. When the indicators demonstrate conviction with a confirmed trend in volumes, whether up or down, analysts feel significantly more comfortable in making a reliable prediction. These volume markers are used to determine the Volume Rate of Change.