Average volume

RECENT NEWS
Wall Street Journal  Sep 13  Comment 
An investment firm sold 6.2 million Starbucks shares between Thursday's close and Friday's session, according to people familiar with the matter, turning over more than double the stock's average daily volume in a single trade.
Forbes  Sep 12  Comment 
The iShares MSCI USA Minimum Volatility ETF (USMV) is seeing unusually high volume in afternoon trading Friday, with over 1.4 million shares traded versus three month average volume of about 339,000.  Shares of USMV were off about 0.4% on the day.
Forbes  Sep 11  Comment 
The most recent short interest data has just been released by the NASDAQ for the 08/29/2014 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  Sep 11  Comment 
The SPDR S&P Global Natural Resources ETF (GNR) is seeing unusually high volume in afternoon trading Thursday, with over 234,000 shares traded versus three month average volume of about 63,000.  Shares of GNR were off about 0.3% on the day.
Forbes  Sep 9  Comment 
The most recent short interest data was recently released by the NASDAQ for the 08/15/2014 settlement date, and Fastenal Co. (NASD: FAST) is the #9 most shorted of the S&P 500 components, based on 14.50 "days to cover." There are a number of ways...
Forbes  Sep 9  Comment 
The S&P 500 Volatility Response Shares ETF (VSPY) is seeing unusually high volume in afternoon trading Tuesday, with over 237,000 shares traded versus three month average volume of about 72,000.  Shares of VSPY were off about 0.3% on the day.
Forbes  Sep 8  Comment 
The iShares Core MSCI Emerging Markets ETF (IEMG) is seeing unusually high volume in afternoon trading Monday, with over 3.2 million shares traded versus three month average volume of about 1.0 million.  Shares of IEMG were down about 0.5% on the...
Forbes  Sep 5  Comment 
The First Trust RBA American Industrial Renaissance ETF (AIRR) is seeing unusually high volume in afternoon trading Friday, with over 541,000 shares traded versus three month average volume of about 39,000.  Shares of AIRR were off about 0.3% on...
Forbes  Sep 2  Comment 
The Guggenheim Frontier Markets ETF (FRN) is seeing unusually high volume in afternoon trading Tuesday, with over 294,000 shares traded versus three month average volume of about 36,000.  Shares of FRN were up about 0.6% on the day.
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...




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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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