Low Volume (LV)

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Definition of 'Low Volume (LV)'

Low volume is watched by traders in the futures market as a turning point indicator. The theory is that as traders become reluctant to trade at a given price level that volume will dry up and indicate a possible reversal.

Low volume is watched in a trending price move and is relative to the volume of previous price bars in a given time period. If on one day average volume is (say) 5,000 contracts per five-minute period and it then drops to (say) 500 contracts per price bar then this would be considered low volume. The low volume figure is subjective and can be anywhere between 5% and 75% of the preceding average volume.

