WINDERMERE, Fla. (Stockpickr) -- Professional traders who run mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Many times when above average volume moves into equity it precedes a large spike in volatility.Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors." Follow TheStreet on Twitter and become a fan on Facebook. Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.
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Twitter and become a fan on Facebook. At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.