In simple terms, it is a large increase in trading volume from one time period to another. Technically speaking, it constitutes a single day on which the volume was much larger than the previous day- at least twice as high, or even three or four times. A volume spike is a measure of trader emotion, and an indication that something happened in the market, particularly as a result of some event such as a surprising news or new fundamental data. It could take the form of a gradual volume increase of a few days associated with sharply rising or dropping prices. A volume spike can be interpreted as a uncorrelated, collective action by a very large number of investors (whereby they hold the same view on the market direction and follow the same course of action based on that view).

Volume spikes are usually associated with the end of a substantial price move. They are most common at the beginning of a trend and at the end of a trend. The beginning of a trend often results from a breakout, and the end of a trend often occurs on a speculative bubble or panic climax.