Average Volume

RECENT NEWS
Forbes  11 hrs ago  Comment 
The iShares MSCI Global Metals & Mining Producers ETF (PICK) is seeing unusually high volume in afternoon trading Thursday, with over 388,000 shares traded versus three month average volume of about 53,000.  Shares of PICK were up about 1.6% on...
Forbes  Dec 17  Comment 
The iShares U.S. Regional Banks ETF (IAT) is seeing unusually high volume in afternoon trading Wednesday, with over 1.6 million shares traded versus three month average volume of about 178,000.  Shares of IAT were up about 0.8% on the day.
Forbes  Dec 16  Comment 
The iShares Core Dividend Growth ETF (DGRO) is seeing unusually high volume in afternoon trading Tuesday, with over 1.2 million shares traded versus three month average volume of about 54,000.  Shares of DGRO were up about 0.4% on the day.
Forbes  Dec 12  Comment 
The iShares Global Materials ETF (MXI) is seeing unusually high volume in afternoon trading Friday, with over 117,000 shares traded versus three month average volume of about 31,000.  Shares of MXI were down about 1.5% on the day.
Forbes  Dec 11  Comment 
The most recent short interest data has just been released by the NASDAQ for the 11/28/2014 settlement date, and we here at Dividend Channel have sifted through this fresh data and screened out these five Dow Jones Industrial Average components. A...
Forbes  Dec 10  Comment 
The iShares Micro-Cap ETF (IWC) is seeing unusually high volume in afternoon trading Wednesday, with over 282,000 shares traded versus three month average volume of about 107,000.  Shares of IWC were down about 0.9% on the day.
MarketWatch  Dec 3  Comment 
Average daily volume for futures and options declined by 14% in November from the year-earlier period, while cash equities rose 9%, Intercontinental Exchange said Wednesday. Average daily volume for commodities rose 12%, with energy up 13%,...
Benzinga  Dec 3  Comment 
CNBC Options Action's Mike Khouw noticed an unusually large bullish options bet in Yum! Brands, Inc. (NYSE: YUM) on Tuesday. Approximately 1.5 times average daily volume was traded and the January expiration was the most active. Somebody bought...
Mondo Visione  Dec 1  Comment 
In November 2014, the international derivatives markets of Eurex Group recorded an average daily volume of 7.8 million contracts (November 2013: 7.5 million). Of those, 5.3 million were Eurex Exchange contracts (November 2013: 5.0 million), and...
Forbes  Nov 26  Comment 
The most recent short interest data has just been released by the NASDAQ for the 11/14/2014 settlement date, and we here at Dividend Channel have sifted through this fresh data and screened out these five Dow Jones Industrial Average components. A...




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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.

Examples

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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