Average Volume

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Mondo Visione  Sep 1  Comment 
In August 2014, the international derivatives markets of Eurex Group recorded an average daily volume of 7.0 million contracts (August 2013: 6.6 million). Of those, 4.8 million were Eurex Exchange contracts (August 2013: 4.5 million), and 2.2...
Forbes  Aug 28  Comment 
The PowerShares Global Listed Private Equity Portfolio ETF (PSP) is seeing unusually high volume in afternoon trading Thursday, with over 643,000 shares traded versus three month average volume of about 512,000.  Shares of PSP were down about...
Forbes  Aug 27  Comment 
The most recent short interest data has been released by the NASDAQ for the 08/15/2014 settlement date, which shows a 1,373,626 share increase in total short interest for Nielsen N.V. (NYSE: NLSN), to 8,540,572, an increase of 19.17% since...
Forbes  Aug 22  Comment 
The iShares U.S. Regional Banks ETF (IAT) is seeing unusually high volume in afternoon trading Friday, with over 526,000 shares traded versus three month average volume of about 129,000.  Shares of IAT were up about 0.2% on the day.
Forbes  Aug 19  Comment 
The PowerShares Dividend Achievers Portfolio ETF (PFM) is seeing unusually high volume in afternoon trading Tuesday, with over 41,000 shares traded versus three month average volume of about 30,000.  Shares of PFM were up about 0.3% on the day.
Forbes  Aug 14  Comment 
The Vanguard Mega Cap ETF (MGC) is seeing unusually high volume in afternoon trading Thursday, with over 59,000 shares traded versus three month average volume of about 31,000.  Shares of MGC were up about 0.3% on the day.
Forbes  Aug 12  Comment 
The most recent short interest data has just been released by the NASDAQ for the 07/31/2014 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  Aug 12  Comment 
The SPDR S&P Transportation ETF (XTN) is seeing unusually high volume in afternoon trading Tuesday, with over 262,000 shares traded versus three month average volume of about 42,000.  Shares of XTN were up about 0.1% on the day.
SeekingAlpha  Aug 12  Comment 
By Chris Katje: Revolution Lighting (NASDAQ:RVLT) reported second quarter earnings last week. What followed from the report was several days of choppy trading and higher than average volume. In the end, share of Revolution Lighting traded down...
Forbes  Aug 8  Comment 
The iShares U.S. Regional Banks ETF (IAT) is seeing unusually high volume in afternoon trading Friday, with over 1.4 million shares traded versus three month average volume of about 111,000.  Shares of IAT were up about 0.1% on the day.




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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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