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What is Stock Trading Volume, Average and Relative Volume?

Stock Trading Volume is the number of shares transacted in a period of time. Stock investors keep track of Trading Volume to determine stocks' liquidity and make buying and selling decisions by using technical indicators in context with changes in Trading Volume. While traders perform their due diligence on a wide array of stocks with the help of stock technical analysis through stock charts, stock traders keep close watch to volume patterns over time that can help them asses the strength of market reliance behind advances and declines in specific stocks.

Simply put, Trading Volume helps to determine the significance of price- or trend changes.

When the price of a stock moves, as long as the Volume is high, it typically means that the change is more significant than in case of low volume, when that price movement occurs. In the line of stock analysis there is more volume data sought.

Stock's Average Daily Trading Volume is the average number of shares traded within a trading day. Daily Volume provides information about how many shares are traded during trading days, but this can be averaged over different periods of time. Average Daily Trading Volume is a definitive metric that serves as a compass for investors depending on their stock strategy which might prioritize either high or low Trading Volume. The majority of investors, especially Day Traders attempt to spot stocks with higher Average Daily Trading Volumes that guarantees more buyers and sellers unlike stocks with low Trading Volume that might be painstaking to be bought or sold at a preferred price.

Relative Volume (RVOL) is a metric - displayed as a ratio - used to gauge how current Trading Volume is compared to past Trading Volume over a specific period of time that can vary. It shows the level of trading activity and interest in a particular stock. The higher a stock's Relative Volume is the more traders are trading it. As a rule, securities exhibiting higher Volume have more liquidity, and tend to trade better and easier than stocks with low Relative Volume.

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