Volume is common place on a "normal" chart, no matter the market being traded. That does not imply it is being used, just that it is often included on a trader's chart by default. Volume is a relatively simply indicator. It is a measure of "how much" of any given asset has been traded throughout a given period of time. It can also be used as a tool to measure the strength of a particular move in the market. In this instance, the higher the volume the more people buying/selling and therefore, the greater the strength of the move. If we have a high volume as price moves higher this indicates that the strength is with the bulls/buyers and we could predict that price will continue to move higher.
Bearing this in mind, we can quite simply assume that in a rising market we will observe increasing volume because more people are buying the asset, pushing the price higher. The opposite would therefore be true for a bearish market where price is moving lower. In this instance we would see a higher volume of sellers.
Volume can be used to identify changes in market direction. A simple example would be if price is moving higher but volume is decreasing therefore indicating a potential reversal to the downside. Decreasing volume hints towards a lack of enthusiasm from the buyers. This is the simplest way volume can be used to assist a trader in making trading decisions. On the flip side of this, if price is consolidating with very small movements up and down and then volume starts to increasing, this could indicate a reversal is about to occur.
Another way to use volume would be as a confirmation signal during breakouts of market structure (support & resistance levels). If price manages to break through certain structure levels in the market, it might be possible to confirm this breakout will lead to further price movement in this direction if the volume has also increased significantly. If there is little or no change in volume, this might indicate a "fakeout" or "false breakout". This is where price breaks through the support or resistance level, indicating a further move in that direction, only to reverse back into the zone. Some people might also class this as a "stop hunt" whereby, large market participants have the ability to drive price higher or lower due to the large individual volume of their trades. For example, they might push price above a certain resistance level in the market because this is a likely area where people who are short/selling will have their stop losses. By pushing price into this area they are creating a large amount of "buy orders" from the short/sellers stop losses (to exit a short/sell trade you must "buy" the market). In doing so, the big player now has a huge amount of people to sell to (all of the buy orders that have been generated from the stop losses being hit). This means he/she can now sell an enormous amount of that asset to all of these buyers. This will drive the price lower and, back to the original point, back below the resistance level to produce a "fakeout" or "false breakout".
Apologies for digressing slightly but these are important, if slightly confusing, market conditions that you should be aware of.
Another good example of how volume can be used to trade would be if price increases alongside an increase in volume. Once this move higher has occurred, we would usually see price retrace lower. If price then moves back up to its previous highs, maybe forming a double top, you should pay attention to the volume compared to that of the previous top. If volume has decreased, this indicates that there is less enthusiasm in the market than the previous time these price levels were hit. Therefore, giving us a bearish signal in other words indicating that price is likely to move lower.
Thank you for your inquiry! I aim to get back to you within 24hrs. If you have not heard back from me within this time please check your spam folder!