Average volume

RECENT NEWS
Forbes  Aug 25  Comment 
An examination of the most recent short interest data revealed these five Nelson Peltz stocks with particularly high short interest, as measured by "days to cover." This metric is just one way to look at short data, but this is a metric we here at...
Forbes  Aug 25  Comment 
The most recent short interest data has been released for the 08/15/2016 settlement date, which shows a 2,639,183 share increase in total short interest for VMware Inc (NYSE: VMW), to 23,707,162, an increase of 12.53% since 07/29/2016. Total short...
Forbes  Aug 25  Comment 
The most recent short interest data has been released for the 08/15/2016 settlement date, which shows a 2,623,343 share decrease in total short interest for Rackspace Hosting Inc (NYSE: RAX), to 13,380,019, a decrease of 16.39% since 07/29/2016....
Forbes  Aug 25  Comment 
The most recent short interest data has been released for the 08/15/2016 settlement date, which shows a 1,180,318 share increase in total short interest for TD Ameritrade Holding Corporation (NASD: AMTD), to 9,884,754, an increase of 13.56% since...
Forbes  Aug 25  Comment 
The most recent short interest data has been released for the 08/15/2016 settlement date, which shows a 1,951,343 share decrease in total short interest for Mallinckrodt plc (NYSE: MNK), to 7,010,784, a decrease of 21.77% since 07/29/2016. Total...
Forbes  Aug 25  Comment 
The most recent short interest data has been released for the 08/15/2016 settlement date, which shows a 649,528 share increase in total short interest for Amphenol Corp. (NYSE: APH), to 4,344,828, an increase of 17.58% since 07/29/2016. Total...
Forbes  Aug 25  Comment 
The most recent short interest data has been released for the 08/15/2016 settlement date, which shows a 3,521,351 share increase in total short interest for Analog Devices Inc (NASD: ADI), to 8,264,574, an increase of 74.24% since 07/29/2016....
Forbes  Aug 25  Comment 
The most recent short interest data has been released for the 08/15/2016 settlement date, which shows a 2,180,718 share increase in total short interest for T-Mobile US Inc (NASD: TMUS), to 20,198,133, an increase of 12.10% since 07/29/2016. Total...
Forbes  Aug 23  Comment 
The SPDR S&P Global Natural Resources ETF (GNR) is seeing unusually high volume in afternoon trading Tuesday, with over 342,000 shares traded versus three month average volume of about 144,000.  Shares of GNR were up about 0.8% on the day.
Forbes  Aug 22  Comment 
The Global X MLP ETF (MLPA) is seeing unusually high volume in afternoon trading Monday, with over 365,000 shares traded versus three month average volume of about 133,000.  Shares of MLPA were down about 0.4% 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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