Assumption: Trends do exist, both upward and downward. And even if you trade, a day late, knowing the trend, you can profit from it.Goal#1: If a stock is over-valued, sell it, if a stock is under-valued, buy it. Goal #2: And to do better than a BUY and HOLD strategy. (Any good stock or company should have an upward long-term trend anyway)I realize that there may be some winning/losing trades...... and certain assumptions must be made, but i am looking for a good generalization.Here are some things i think i know:Assumption#1: If High Volume, the price is realized.Assumption#2: If Low Volume, the price isnt yet realized necessarily.Other Assumptions: It costs $ to trade, this must also be factored in too (a minimum profit amount?)And assuming that you are not reacting to news items because you are the last to know about them. (but are aware of price changes and trend movements)

It sounds like you're referring to technical analysis. Technical analysis looks at patterns of historical volume and stock prices in an attempt to predict if a stock will go up or down. It is not used to estimate the value, only the price's future direction.Value is estimated using a discounted cash flow analysis. It's far too complicated to explain the calculation here, but there are websites that will do it for you. There is a good one at www.smartmoney.com

Why are you trying to re-invent the wheel?Here are some of my rules:1] I NEVER trade stock priced less than $26.50/share. I'm not interested in joining a "pity party".2] I NEVER trade stock prices between $45.01 to $55 (This is referred to as "the sexy area" or "the doldrums". Stocks rarely move out of this range.3] I NEVER trade the .BB [Bulleting Board] AND .PK ["Pink sheet"] AND Penny stocks. There is entirely too much volatility and risk.4] I NEVER trade any stock with volume less than 1,250,000 shares per day. The volume MUST be consistent for at least the most recent 6 months.5] I NEVER "chase" a trade. I ALWAYS wait for the trade to come to me. 6] I ALWAYS check for the earnings announcement date. I NEVER trade that stock 5 trading days before AND NEVER trade that stock 5 trading days after the earnings announcement date.7] I ALWAYS check the news for that stock.8] I ALWAYS check for stock splits for that stock. I NEVER trade when that stock announces the split.9] I ALWAYS look for the reasons NOT TO ENTER A TRADE rather than look for reasons TO ENTER THE TRADE.10] I ALWAYS plan the trade and trade the plan.11] I NEVER "bet the farm" (the entire trading account) on one trade.I found following those rules - and a few others keeps me out of trouble.Thanks for asking your Q!I enjoyed taking the time to answer it - or trying to answer it!VTY,Ron BerueYes that is my real last name!

Your Assumption #1 is invalid. High volume may lead to the opposite result, meaning price leading away from the price you expect.Your Assumption #2 is invalid. Many prices are realized on low volume.Sorry but I don't think you can calculate value of a stock based on volume.Have you looked at On-Balance Volume?Define "over-valued". Based on what?Trends do exist. Based on what time-frame?

The value of the stock is exactly the price at which the market will trade it. There is no other value. Economists and academics will tell you there is some "underlying or intrinsic value" that can be calculated from earnings per share and other fundamental information, but, in the end, go the the market cash in hand and find out the price. That is the value.