Average Volume

RECENT NEWS
Forbes  9 hrs ago  Comment 
The iShares MSCI USA Momentum Factor ETF (MTUM) is seeing unusually high volume in afternoon trading Wednesday, with over 77,000 shares traded versus three month average volume of about 27,000.  Shares of MTUM were off about 0.1% on the day.
Forbes  Jul 29  Comment 
The Vanguard Consumer Staples ETF (VDC) is seeing unusually high volume in afternoon trading Tuesday, with over 638,000 shares traded versus three month average volume of about 89,000.  Shares of VDC were off about 0.1% on the day.
Forbes  Jul 22  Comment 
The Guggenheim BulletShares 2015 Corporate Bond ETF (BSCF) is seeing unusually high volume in afternoon trading Tuesday, with over 2.9 million shares traded versus three month average volume of about 100,000.  Shares of BSCF were up about 0.1% on...
Forbes  Jul 21  Comment 
The PowerShares S&P 500 Low Volatility Portfolio ETF (SPLV) is seeing unusually high volume in afternoon trading Monday, with over 7.7 million shares traded versus three month average volume of about 684,000.  Shares of SPLV were down about 0.4%...
Forbes  Jul 17  Comment 
The iShares North American Tech-Multimedia Networking ETF (IGN) is seeing unusually high volume in afternoon trading Thursday, with over 430,000 shares traded versus three month average volume of about 26,000.  Shares of IGN were up about 0.2% on...
Forbes  Jul 11  Comment 
The most recent short interest data has been released by the NASDAQ for the 06/30/2014 settlement date, and we here at Dividend Channel like to sift through this fresh data and order the underlying components of the S&P 500 by "days to cover."...
Forbes  Jul 11  Comment 
The most recent short interest data has been released by the NASDAQ for the 06/30/2014 settlement date, which shows a 1,035,100 share increase in total short interest for Madison Square Garden Co (NASD: MSG), to 3,403,624, an increase of 43.70%...
Forbes  Jul 11  Comment 
The most recent short interest data has been released by the NASDAQ for the 06/30/2014 settlement date, which shows a 2,547,025 share increase in total short interest for Kohl's Corp. (NYSE: KSS), to 26,562,210, an increase of 10.61% since...
Forbes  Jul 11  Comment 
The most recent short interest data has been released by the NASDAQ for the 06/30/2014 settlement date, which shows a 3,013,974 share decrease in total short interest for Covidien plc (NYSE: COV), to 2,952,384, a decrease of 50.52% since...
Forbes  Jul 11  Comment 
The most recent short interest data has been released by the NASDAQ for the 06/30/2014 settlement date, which shows a 2,899,013 share increase in total short interest for Commerce Bancshares, Inc. (NASD: CBSH), to 4,429,661, an increase of 189.40%...




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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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