What Is Average Volume? - Fidelity (2024)

FAQs

What Is Average Volume? - Fidelity? ›

Description. The Average Volume is the total volume for a specified period divided by the number of bars in that same period.

Average Daily Trading Volume (ADTV) refers to the number of shares of a particular stock that, on average, change hands during a single trading day. Significant deviations from the ADTV usually indicate greater or lesser buying or selling interest in the stock from large institutional investors.

Average daily trading volume (ADTV) is the average number of shares traded within a day in a given stock.

Average Volume 3M means the daily average number of shares traded during the Scheduled Trading Days of the preceding three months period during which the relevant Exchange is open for trading for its regular trading sessions.

The Average Volume is the total volume for a specified period divided by the number of bars in that same period.

To reduce such risk, it's best to stick with stocks that have a minimum dollar volume of $20 million to $25 million. In fact, the more, the better. Institutions tend to get more involved in a stock with daily dollar volume in the hundreds of millions or more.

On average, day traders with $10,000 accounts can make $200-$600 per day, with skilled traders aiming for 2%-5% returns daily. So, it is possible to achieve a daily profit of $200 to $600 with a $10,000 account.

So, remember, rising volume with rising prices is usually good, but low volume might mean trouble. Shows bullish signs: Volume as a trading tool can indicate bullish signs. Consider a scenario where a stock's price falls, but the trading volume increases. After that, the price goes up a bit and then drops again.

Volume measures the number of shares traded in a stock or contracts traded in futures or options. Volume can indicate market strength, as rising markets on increasing volume are typically viewed as strong and healthy. When prices fall on increasing volume, the trend is gathering strength to the downside.

What is volume average on chart? ›

A Volume + Moving Average indicator is used in charts and technical analysis. It refers to the average volume of a security, commodity, or index constructed in a period as short as a few minutes or as long as several years and showing trends for the latest interval.

Average has traditionally been a popular measure of a middle point in a set, but it has a disadvantage of being influenced by single values which are much higher or lower than the rest of the values.

Generally speaking, a stock should have a 50-day volume trading average of 400k or more and a minimum of 20-million in dollar volume. If the dollar volume is even bigger—in the hundreds of millions—there is even less risk you'll end up holding the bag in a selloff.

Any level of volume that provides investors with specific insight into a security's price action (and a sense of the trading interest in that security) can be thought of as a good trading volume.

An uptrend paired with increasing and/or above average volume implies investor enthusiasm for that stock or asset is strong, which could lead to more buying and even higher prices.

Up/Down Volume Ratios greater than 1.0 are considered to be Bullish while ratios less than 1.0 are regarded as Bearish.

High Volume Stocks and Low Volume Stocks

Meanwhile, low volume stocks are more thinly traded. There's no specific dividing line between the two. However, high volume stocks typically trade at a volume of 500,000 or more shares per day. Low volume stocks would be below that mark.

When the bars on a bar chart are higher than average, it's a sign of high volume or strength at a particular market price. By examining bar charts, analysts can use volume as a way to confirm a price movement. If volume increases when the price moves up or down, it is considered a price movement with strength.

Normally, a minimum liquidity volume of 10% can be used as a benchmark but one also needs to ensure that this liquidity is sustainable and is liquidity of high quality.