Average volume

RECENT NEWS
Forbes  Oct 21  Comment 
The First Trust Large Cap Value AlphaDEX Fund ETF (FTA) is seeing unusually high volume in afternoon trading Tuesday, with over 585,000 shares traded versus three month average volume of about 188,000.  Shares of FTA were up about 1.4% on the day.
Forbes  Oct 17  Comment 
The PowerShares S&P 500 Low Volatility Portfolio ETF (SPLV) is seeing unusually high volume in afternoon trading Friday, with over 5.3 million shares traded versus three month average volume of about 1.1 million.  Shares of SPLV were up about...
Forbes  Oct 15  Comment 
The First Trust ISE Global Wind Energy Index Fund ETF (FAN) is seeing unusually high volume in afternoon trading Wednesday, with over 1.8 million shares traded versus three month average volume of about 98,000.  Shares of FAN were off about 5% on...
Forbes  Oct 14  Comment 
The iShares Global Energy ETF (IXC) is seeing unusually high volume in afternoon trading Tuesday, with over 944,000 shares traded versus three month average volume of about 137,000.  Shares of IXC were up about 0.3% on the day.
Benzinga  Oct 13  Comment 
Shares of GoPro Inc (NASDAQ: GPRO) were volatile on Monday, trading lower by more than 9 percent. Bloomberg reported that the move lower may be attributed to news reports that F1 driving legend Michael Schumacher's skiing accident was directly...
Forbes  Oct 13  Comment 
The First Trust RBA American Industrial Renaissance ETF (AIRR) is seeing unusually high volume in afternoon trading Monday, with over 301,000 shares traded versus three month average volume of about 60,000.  Shares of AIRR were up about 0.7% on...
Forbes  Oct 2  Comment 
The First Trust RBA American Industrial Renaissance ETF (AIRR) is seeing unusually high volume in afternoon trading Thursday, with over 412,000 shares traded versus three month average volume of about 52,000.  Shares of AIRR were off about 0.7%...
Forbes  Oct 1  Comment 
The EGShares FTSE Beyond BRICs ETF (BBRC) is seeing unusually high volume in afternoon trading Wednesday, with over 652,000 shares traded versus three month average volume of about 91,000.  Shares of BBRC were off about 1.1% on the day.
MarketWatch  Oct 1  Comment 
Shares of Lakeland Industries Inc. rallied Wednesday following confirmation of the first case of the Ebola virus on U.S. soil. Lakeland shares rose 10% to $7.62 on more than 10 times their average daily volume before midday. Last month, Lakeland...
Commodity Online  Oct 1  Comment 
The average daily trading volume (ADTV) for the month stood at Rs. 3796.32 crores. With 72621 MT of commodities delivered through the exchange platform in the month.




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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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