What is daily volume in terms of investing in stocks and how do I use it to succeed?
Daily volume is the number of total shares that are traded in a given day for one stock. By tracking daily volume investors can have a better sense of overall liquidity and see when big players such as mutual funds or hedge funds have traded big positions.
Every time an investors buys or sells a share of stock during the day it is added to the total daily volume tally for that particular stock. This tally is run throughout the day until the market closes at 4:00 PM EST.
There is also known as the average daily volume which tells investors how many shares per day on average a particular stock trades. This is very important for strategy because if for instance stock XYZ has a daily volume average of 1,000,000 shares and on the day it releases earnings the stock shoots up 5% and trades over 2,000,000 shares investors know that large institutions were involved and support the stock, a bullish sign.
Overall investors look for high daily volume on up days and low daily volume on down days. For further reading take a look at our volume interpretation quiz.