Average Volume

MarketWatch  Sep 27  Comment 
Call it the “Kavanaugh effect.” Stock market participants are warning that action on Wall Street could grind to a halt during the hotly anticipated hearing of Supreme Court nominee Brett Kavanaugh on Thursday.
MarketWatch  Sep 26  Comment 
Call it the “Kavanaugh effect.” Stock market participants are warning that action on Wall Street could grind to a halt during the hotly anticipated hearing of Supreme Court nominee Brett Kavanaugh on Thursday.
Benzinga  Sep 18  Comment 
Viking Therapeutics Inc (NASDAQ: VKTX) shares have raced away Tuesday following the release of positive top-line results from a midstage trial. The shares were skyrocketing 98.12 percent to $20.60 on roughly 18 times their average volume at...
Benzinga  Jul 20  Comment 
Sellas Life Sciences Group Inc (NASDAQ: SLS) shares are on solid footing Friday following the announcement of Fast Track designation for its multiple myeloma candidate. At the time of writing, the shares were rallying 10.67 percent to...
Motley Fool  Jun 19  Comment 
Sarepta's experimental gene therapy could be a game-changer for patients with Duchenne muscular dystrophy.


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The average volume is the average number of shares traded daily for a particular security

Also known as average daily volume or average daily trading volume, the average daily volume is a measure of the liquidity of a stock based on the number of shares that trade hands from sellers to buyers each day. If a buyer purchases 100 shares, then the volume for that period increases by 100 shares from that transaction.

Unusually high volume in comparison to the average daily volume can indicate big news about a company - if something has changed investors' perception of a company's value, the trading that results (either buying or selling) pushes up volume for that day - for example, if a company submitted earnings or guidance that was unexpectedly high or low.

Securities with high average daily volume can be easily traded and are very liquid. Companies with low average daily volume are less liquid and harder to trade because there are fewer buyers and sellers for the stock. Securities with low average daily volumes (for example, fewer than 50,000 trades a day) are susceptible to higher volatility because sellers have more control over the price of the security. Securities with higher average daily volumes are more competitive and therefore less volatile.


Consider an extreme case of low average daily volume where there is only one seller of a security. If you want to buy that security from the seller, you have to accept their price because there is no one else competing for the sale. Later, as an owner of this low average daily volume security, the company releases horrible earnings news. Now, wou want to sell the security, however, because there are very few buyers for security, you are stuck with it.

In another case, you have two securities you're considering purchasing. Everything about the two companies is equivalent -- share price, earnings, demographics, etc. -- except, one of the securities has a higher trading volume than the other. In this case, purchase the company shares with the higher trading volume. This will ensure you purchase the shares at a competitive price and will have a better chance of selling the shares in the future.

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