Daily trading volume

The short interest ratio is a quick way to see if a stock is heavily shorted versus its average daily trading volume. Illiquid options have very low or no open interest. Short-interest theory states that high levels of short interest are a bullish indicator. After the breakout, the price consolidates and volume is quite low, except for one high volume day. The average is less affected by single day events, and is a better gauge of whether overall volume is rising or falling.

Formulate your stock day trading strategy based on price movements, and then add in volume analysis to see if it improves your performance. The trading volume is a very important measure. So, you must be extremely careful when trading stocks with daily trading volume below For example, if the trend heads up but volume steadily declines, it shows fewer people want to buy and keep pushing the price up. We had 4 transactions on shares, right? So, you can use it to confirm the stock price changes, no matter if it goes up or down. Partner Links.

It also makes collecting your profits easier because many other traders will want to take your position buy from you when you sell when you are satisfied with your profits. Essentially, volume is an indication of how much attention the market is paying to a stock. Opinion Show more Opinion. US Show more US. What is an average daily trading volume for a great stock?

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Motley Fool. Then, divide the total by X. Archived from the original on That often causes price reversal. The stocks that traded thinly are very risky and changeable.
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Low volume assets have fewer buyers and sellers, and therefore it may be harder to enter or exit at a desired price. Finance Home. Anyway, this is an important metric that will show you if some stock is easy or difficult to trade. Volume is the raw amount of how many contracts change hands. Any large buying might influence the stock price skyrocketing.
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The increased volume shows buyers believe the stock is moving, and want to purchase the stock. So, the volume in this particular case would be expressed as shares, not or Also, you will notice that these bars are displayed in two colors, red and green. Sign in. Your Money. The calculation is quite simple, just divide the number of shares by the number of tradings in a specified period.
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Related Articles. Expert insights, analysis and smart data help you cut through the noise to spot trends, risks and opportunities. In addition, steadily rising daily volume over an extended period of time could be a sign a stock is forming a base in anticipation of a catalyst or big move. Stocks tend to be less volatile when they have higher average daily trading volumes because much larger trades would have to be made to affect the price. Sign in to view your mail. Technical analysis. For example, if trading volume is low , the stock is cheaper because there are not too many traders or investors ready to buy it.
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But, the opposite is with higher volume. You can measure the volume with a moving average , also. To repeat, the stock with higher trading volume is less volatile because traders have to make many and many trades to influence the price. For example, if the trend heads up but volume steadily declines, it shows fewer people want to buy and keep pushing the price up. For example, if trading volume is low , the stock is cheaper because there are not too many traders or investors ready to buy it. You may find the following guidelines and descriptions helpful for understanding and analyzing volume.
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Daily trading volume:

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