What does volume ratio mean?

Volume ratio in finance refers to the comparison of the trading volume of a particular security or asset over a specific period of time. It is a measure of the level of trading activity for a particular asset and is calculated by dividing the total volume of shares or contracts traded by the average daily volume over a specific period. The volume ratio is an important indicator for investors and traders as it provides insights into the level of interest and momentum in a particular asset. A high volume ratio indicates a higher level of trading activity and can be a sign of increased interest or volatility in the asset. On the other hand, a low volume ratio may suggest a lack of interest or liquidity in the asset. Investors and traders use volume ratio as a tool to assess market sentiment, identify potential trends, and make informed trading decisions. It can also be used in conjunction with other technical indicators to confirm or validate potential price movements in the market. Overall, volume ratio is an important metric in finance that provides valuable information about the level of trading activity and can help investors and traders make more informed decisions in the market.