How To Use Webull Volume Analysis

The new Webull Trading App offers plenty on new tools and features to help stocks and options traders.

In this discussion, we will be focusing on How to Use The Webull Volume Analysis feature.

With the intended goal to incorporate this tool into your trading strategy to help grow your account.

How To Use Webull Volume Analysis | What Is Volume in Stock Trading

Volume in stock trading is the sum of the number of shares sold plus the number of shares bought.

Traders keep a keen eye on this indicator because it can help determine the conviction in either the bullish or bearish direction.

For instance, a stock selling up with high volume will likely attract more sellers and thus the price will likely continue to go down.

How To Use Webull Volume analysis - Example of Volume spike indicating a bullish breakout on WDC daily Chart
WDC breakout out of $50-$55 Range following Spike in Daily Volume

The above chart is a very good illustration of how you can use volume as a confirmation of a bullish breakout.

What is Good /Strong Volume

The stock broke out of a two-month range the day after huge volume spike took it out of its previous box.

The following days, WDC stock kept posting higher highs on the daily chart.

In the case of WDC above chart, this coincided with Earnings Release.

However, a volume spike can occur on any type of news. May it be good or bad.

Traders often use Volume in pre-market analysis to help determine the interest in a given stock.

How To Analyze Stock Volume

Relative Volume indicator is a quick way to find out if a stock attracting higher volume.

A strategy can then be established using relative volume which is defined as the current volume divided by the average daily volume.

Values above 0.5 are a good starting point.

How To Use Webull Volume Analysis | How To Read Webull Chart

For a stock or options trader, setting up your chart is one of the most important task.

Because you want to have enough indicators to make a decision on the direction of the stock.

Yet, in my experience, too many indicators can lead to analysis paralysis.

Therefore, we created the video below to help traders create and read Webull trading charts without too many useless indicators.

Four to five indicators should be enough on your Webull chart.

Anything higher and you set yourself up for many dilemmas especially if you are a beginner trader.

Webull Volume Analysis | What is Webull Analysis Tab

When you select a stock on the Webull App, the top view is the chart with your desired indicators as described in the above video.

Then comes a menu from left to right reading | Quotes| News| Comments | Analysis |Press Release | Financials.

Let’s spent some time dissecting the content of the Analysis section.

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The Usual Analysts Ratings

The Webull Analysis feature starts with the classic Analyst ratings and price targets.

Just like many trading or investing tools, it provides a summary of how analysts think the stock may performing in the near future.

We are all too familiar with this information as depicted in the image below.

How To Use Webull Volume Analysis - Analysts Rating and Target Price for WDC stock
Analysts Ratings And Price Target for WDC stock from Webull Trading App

What Is Webull Positions Cost Distribution

Positions Cost Distribution Analysis is fairly new feature on Webull trading platform.

Its provides traders with a way to determine the potential direction of a stock.

In order to understand the concept of Position cost distribution, you need to assume that all the shares are bought and held by the the investors.

The analysis is looking at how many shares were bought at which price level for a given period of time: day , week, month etc.

Assume company XYZ has a float of 1000 shares in total.

Different investors bought all thee shares at the the price level below:

  • 100 shares were bought for $50
  • 250 shares were bought for $52
  • 450 shares were bought for $55
  • 200 shares were bought for $60

This represents the position cost distribution for our example company XYZ.

Profitable Shares at Market Close

Now, we can look at the closing price of the stock to determine the % of profitable shares.

In our example of company XYZ, let’s assume the closing price is $53.

Therefore, we can infer that (100+250) = 350 shares out of the 1000 were profitable at the closing of the market.

How To Use Webull Volume analysis - Position Cost Distribution for AAPL stock
Position Cost Distribution for AAPL Stock | 61% Total Profitable Shares

This represents 35% of the shares only.

Thus, 65% of the shares have unrealized loss.

We used “unrealized because those shares are still been held by their buyers according to our initial assumption.

How To Use the Position cost Distribution for Short term trading

In general, if a stock price is high and a large ratio of have unrealized losses, there is a high probability the the stock will decrease in the short term.

In the above example, 65% of the shares have unrealized profit because the closing price of $53 is well below their buying positions.

Here is the best readout on the concept of Positions Cost Distribution to help understand this new indicator.

How To Use Webull Volume analysis - Description of Positions Cost Distribution Indicator
What Is Positions Cost Distribution | New Indicator from Webull Trading App

As part of positions cost analysis, two other metrics are introduced: namely Cost concentration and profited shares at market close.

How To Use Webull Volume Analysis - Cost Concnetration definition
Cost Concentration Metric Definition

What does Webull Positions Cost Distribution Indicator tell You

At the end of the day, as trader or investors, we need tools and indicators to help make investment decision.

Such is the case for the positions Cost distribution Indicator.

Below is the readout with a clear and easy example how you can use Positions Cost Distribution in your trading.

How To Use Webull Volume Analysis - Example of Position Cost Distribution Indicator Usage
Position Cost Distribution Indicator Illustrated through an Example

How To Use Webull Volume Analysis in Day Trading

In addition to the Level-2 data provided in the Quotes section inside the Webull App, there is a Volume analysis chart I started using recently.

How To Read Volume Analysis on Webull

The aim of the volume analysis chart below is to help you as a trader understand how and where the money is distributed on the stock you are trading relative to the current price.

How To Use Webull Volume analysis - Volume analysis Graph next to Time and Sales Profile on Webull
Webull Volume Analysis Chart for WDC as of March 5 2021

Why is Volume analysis important you may ask ?

Because once again, that will help you in determining the direction of the stock.

I used a short and simple video to show exactly how you can use the Webull Volume Analysis feature as part of your day trading.

I was able to read the SPY Volume Analysis on my Webull trading App to set up a very profitable option trade😁.

I mostly trade options so time is always a very important element to consider.

Especially when trading a very volatile instrument such as SPY on Expiration Day.

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