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question about GameStop price drop without trade volume increase

I would be very interested if someone could explain to me why there is such a significant price drop in price for the GameStop stock on an hourly chart without a corresponding significant increase in trade volume according to this chart? I would think that significant drop in price would correspond with significant increase in sell volume when all the people holding this GME stock decide to take profits while they still can, but I do not see obvious increase in trade volume. By the way, I notice same pattern with other securities as well where I see significant changes in price, but without corresponding obvious changes in trade volume. Intuitively it makes sense that significant changes in price would correlate with significant changes in trade volume, but quite often I just do not see this relation reflected on charts. I would appreciate if someone could explain what is the reason for this behavior.



Thank you in advance,

Artem

Comments

  • markdmarkd mod
    edited January 28
    Price changes and volume are not necessarily related.

    You can have several scenarios

    big volume and little price change - means that for every share for sale at a price, there are dollars available to buy the shares, so the price doesn't have to change.

    big volume and a lot of price change up - the shares available at a certain price are not enough to satisfy the demand at that price, and buyers are willing to keep bidding up

    big volume and a lot of price change down - there are not enough dollars available to buy the shares offered at a certain price and sellers are willing to drop their prices to dump their shares.

    small volume and little price change - there is not much interest in either buying or selling

    small volume and big price change up - there are few sellers and even a big premium can't get many to sell

    small volume and big price change down - there are few buyers and even a good discount doesn't draw them out.

    So, price change has to do with the balance of shares for sale vs. dollars available to buy them at each price, and the willingness of buyers and sellers to accept a discount or pay a premium.

    In the particular case of GME and a few others, apparently several brokers stopped taking buy orders from retail customers but let them sell. So, since there were many fewer buyers to bid for the shares, sellers had to take a discount.
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