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Average Volume

The combination of the average daily volume for a stock with the recent trends in a Stock’s Share Price could give an important indication of positive or negative sentiment towards a Stock. Average volume gives an indication of the overall liquidity in a stock.

The average daily volume traded for a stock is calculated by dividing the total volume for the previous three months by the number of trading days in the period. The calculation is done on a rolling basis. Then this number is compared to the current daily volume traded. The average volume combined with the recent trends in the Stock Price could give an indication if interest in the Stock has increased or decreased. Also, the average daily volume must be taken into consideration when sizing possible trades. As a guide, if the trade is more than 5% of the average daily volume of a stock, there is the possibility that your trading activity could move the share price. The average daily volume is important to consider for Small Cap Stocks and critical in trading Microcap Stocks.

Trading
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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: wwBLOG@smartest-data.blog or Telegram +393339034488

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