One of the most basic but useful metrics a stock trader can watch is daily trading volume. Volume is simply the total number of shares that change hands in a given time period.
Essentially, volume is an indication of how much attention the market is paying to a stock. A high volume means lots of trades and/or very large trades. Technical stock traders often use volume to confirm breakouts or other signals. A technical signal is often considered much more meaningful if it's accompanied by heavy trading volume.
Why Average Daily Trading Volume Is Important
In addition to average daily volume, traders will often watch for large changes in volume. Volume tends to spike during periods of capitulation, which can mark the end of a long-term trend. 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. At the same time, if volume tapers off as a stock price rises, it could be a signal the stock is running out of buyers and could soon be reaching a peak or pullback.
Other more advanced technical trading metrics, including on-balance volume, Chaikin money flow and Klinger oscillator, are all based on changes in trading volume.
Here are the 13 stocks and funds listed on major U.S. exchanges with the highest average daily trading volume, according to Finviz:
- Chesapeake Energy Corporation (NYSE: CHK), 71.1 million shares.
- VanEck Vectors Gold Miners ETF (NYSE: GDX), 63.2 million shares.
- SPDR S&P 500 ETF Trust (NYSE: SPY), 62.2 million shares.
- General Electric Company (NYSE: GE), 58.5 million shares.
- iShares MSCI Emerging Markets Indx (NYSE: EEM), 57.1 million shares.
- Bank of America Corp (NYSE: BAC), 53.2 million shares.
- Advanced Micro Devices, Inc. (NASDAQ: AMD), 51.9 million shares.
- Financial Select Sector SPDR Fund (NYSE: XLF), 49.6 million shares.
- CR SUISSE AG NA/VELOCITY SHS DAILY (NASDAQ: TVIX), 38.2 million shares.
- Ford Motor Company (NYSE: F), 34.7 million shares.
- BARCLAYS IPTH SRS B S&P SHRT TRM ETN (BATS: VXX), 34.2 million shares.
- Nio Inc - ADR (NYSE: NIO), 33.4 million shares.
- AT&T Inc. (NYSE: T), 30.4 million shares.
The 13 stocks and funds mentioned above are some of the most popular and highly liquid stocks in the market. However, the volume of stocks like Nio and Chesapeake Energy may give an overly inflated impression of the market’s interest given volume is measured in shares and stocks like Nio and Chesapeake have share prices of under $2.
For example, a 100-share Chesapeake trade would be worth $64, whereas 100 shares of volume in Amazon.com, Inc. (NASDAQ: AMZN) would be worth $175,253.
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