What is a key characteristic of high volume in relation to market behavior?

A key characteristic of high volume in relation to market behavior is that it often accompanies high volatility. High trading volume indicates increased participation and activity among traders, which can lead to rapid price movements. When many market participants are buying and selling, it reflects a stronger consensus about the value of an asset, often resulting in significant price fluctuations.

High volume can signal that a trend is gaining momentum and may contribute to a breakout or breakdown, where prices move sharply in one direction. This increased activity and trader interest can create an environment where volatility rises, as larger orders can lead to abrupt changes in price levels when executed.

In contrast, market indifference would suggest low participation, and constant price levels typically occur in quiet markets with low volume, while a price drop is not a guaranteed outcome of high volume. Thus, associating high volume with potential for increased volatility accurately captures how market dynamics are influenced by trading activity.