Difference between Volume Traded and Volume Delivery

by Vivek Bajaj on Basic Technical Analysis, Technical Analysis

— 3 minutes read—

For being a technical analyst, it’s important to understand trading volume and also quite helpful to derive the demand and supply.

Both price and volume are used as inputs for studying the price movements of the stocks.

Meanwhile, the stock exchange also provides additional information about volume known as ‘delivery volume’.

This can help traders to predict near term market direction.

Therefore, let us understand about volume and delivery volume and also differentiate between these two widely used tools in the stock market:

What is Volume?

The quantities of share trading in a particular trading session are known as the volume in the stock market. The trading session can be categorized in various time frames such as 5 Minutes, 1 Hour, daily, weekly, and monthly, etc.).

Volume cannot be termed as buying volume or selling volume.

For a trade to take place there should be one buyer and one seller.

The high volume indicates good participation of the traders during that period and price range.

Traded volume is the number of shares which are traded on a daily basis during the trading hours for a particular share.

One should remember that when counting traded volume, each buy or sell transaction is only counted once. If A sells 500 shares and B buys 500 shares. Then the traded volume is 500 shares and not 1000 shares.

What is Delivery volume?

It is not necessarily that every trade settles. Some trades are of intraday in nature, in which the trade positions are closed within the day.

Delivery volume can be derived by deducting the intraday volume with total volume.

When the number of shares are taken for delivery it means that more shares are being accumulated. It shows the investors are getting more interested in this stock because of prospects.

How we can use delivery volume?

It is quite possible to predict the trend by analysing delivery volume especially during the breakouts, we need high delivery volume to determine if the trend is strong or not.

Let us discuss various scenarios to understand how we can analyse delivery volume:

Difference between Traded Volume and Delivery Volume:

The main difference between traded volume and delivery volume is that traded volume is the total number of shares traded in a day and delivery volume is the shares which get transfers from one Demat account to the other and they are not squared off within a day.

Let us understand this with the examples below:

Example 1:

When in the same example you have three players A, B, C
Transaction 1: A buys 100 shares, B sells 100 shares
Volume = 100
Transaction 2 = A sells 70 shares, C buys 70 shares
Volume = 70
Total day transaction = 100 + 70 = 170
A buys 30 shares in delivery (100-70)
B sells 100 shares in delivery and C buys 70 shares in delivery
So A and C buys 100 (30+70) in delivery, B sells 100 shares in delivery

Hence the total traded quantity is 170 and the total delivery is 100

Example 2:

My example took two players,
Transaction 1: A buys 100 shares, B sells 100 shares
Volume = 100
Transaction 2: A sells 70 shares, B buys 70
Volume = 70

So Delivery volume is 100-70 = 30 and Total traded volume in day 100+70 = 170

• Example 3:

When in the above example you have three players A, B, C and transactions are little varied
Transaction 1: A buys 100 shares, B sells 100 shares
Volume = 100
Transaction 2 = A sells 70 shares, C buys 70 shares
Volume = 70
Transaction 3: C sells 50 shares to B
Volume= 50
Total day transaction = 100 + 70 + 50= 220
A buys 30 shares in delivery (100-70)
B sells 50 (100-50) shares in delivery and C buys 20 (70-50) shares in delivery

So A and C buys 50 (30+20) in delivery, B sells 50 shares in delivery

Hence the total traded quantity is 220 and the total delivery is 50.

Key Takeaways:

  • Traded volume is the number of shares which are traded on a daily basis during the trading hours for a particular share.
  • The high volume indicates good participation of the traders during that period and price range.
  • Delivery volume can be derived by deducting the intraday volume with total volume.
  • The main difference between traded volume and delivery volume is that traded volume is the total number of shares traded in a day and delivery volume is the intraday volume minus the total volume.

Disclaimer

Elearnmarkets.com wants to remind you that all our content is created solely for the purpose of education. No strategy, stock, commodity, fund or any other security discussed here is any way a recommendation for trading or investing. Elearnmarkets.com will not be any way responsible for trading losses incurred by any individual or entity for trading with real money. Please take advise of certified financial advisers before trading or investing.

Please leave a comment

*