Turn up the Volume

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Trading volume is a metric used in the equity market that identifies the total number of shares in a company which were traded during a defined time period.


What Does This Tell You?

  • High volume indicates strong interest or activity in a stock.
  • Low volume could suggest disinterest or uncertainty among investors.


Institutional Activity

Large volume increases or declines may suggest that buying or selling by large institutions is occurring. These will generally be funds or endowments that have taken interest or disinterest in a company’s future prospects. This may or may not change your investment thesis, however it is a useful metric to consider when making investment choices.


For Instance

If a company generally has a daily trading volume of 20 million shares, but suddenly has a trading volume of 100 million shares, perhaps something of note has occurred to warrant this interest. Perhaps it requires a closer look to understand the potential opportunity.

Conversely, if the opposite occurs, and there is a lower than usual volume of trade, It is possible that liquidity is drying up due to lack of interest in the company amongst investors.


Don’t Necessarily Follow the Herd

Just because something is currently in or out of favor with traders and institutions does not necessarily mean it is right or wrong for you and your family.


As usual, contact a professional before you rely on any of this information to make investment choices. Many things must be considered to achieve your desired financial objectives.


-Zac