What is Uptick Volume?
Uptick volume is the number of shares of a particular stock that trades when the price is increasing.
How Does Uptick Volume Work?
Let's assume that in the last hour, Company XYZ stock increased from $15 to $17 per share for 30 minutes. During that time, investors bought 2 million shares of the company. This is the uptick volume.
Now let's say that for the other half hour, the price of Company XYZ stock fell from $17 to $14. During that time, investors sold 3 million shares (this is the downtick volume).
In finance, net volume refers to the difference between a security's uptick volume and its downtick volume. In our case, the net volume would be 3 million - 2 million = 1 million shares.
Why Does Uptick Volume Matter?
Uptick volume is a measure of momentum and is a frequent component of various technical trading strategies. Generally, however, when uptick volume is bigger than downtick volume, the implication is that the demand for the shares is rising and the stock is hot. When downtick volume outweighs uptick volume, the implication is that the stock is on a downward trend.