Volume, or trading volume, is a term in capital markets, referring to the number of shares or contracts traded in a security or in an entire market during a given period of time.
In the context of stock trading on a stock exchange, the volume is commonly reported as the number of shares that changed hands during the day. Average volume is reported as the average volume over a longer period of time, normally one to three months. When the significant positive or negative news is made public about a company, the volume of the company’s stock will usually deviate from its average volume, meaning that more people are trading this stock.
Higher volume for a stock is an indicator of higher liquidity. For institutional investors who wish to sell a large number of shares of a certain stock, lower volume will force them to sell the stock slowly over a longer period of time.
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