Glossary
Trading volume
The number of shares or contracts that change hands in a given period, the basic measure of how actively and how liquidly a security trades.
On this page
Trading volume counts how many shares, or contracts, traded during a period: a minute, a day, a week. Each trade is counted once, so 1,000 shares bought from one seller adds 1,000 to volume, not 2,000. Volume matters for two reasons: it shows how easily you can trade without moving the price, and it shows how much conviction sits behind a price move.
How it is used
Volume is usually read relative to normal. Average daily volume over 20 to 90 days sets the baseline, and relative volume compares today against it.
Technicians read volume as confirmation. A breakout through resistance on heavy volume is considered more credible than one on light volume. Rising prices on falling volume can signal a tiring trend. Volume-based indicators such as on-balance volume and VWAP build these ideas into formulas.
Things to know
US volume is fragmented across more than a dozen exchanges and many off-exchange venues, and consolidated figures add them together. Volume is always heaviest near the open and the close, with the closing auction often among the largest single prints of the day, so intraday comparisons should match the time of day. Volume does not reveal direction on its own: every share bought was also sold. Low-volume stocks tend to have wider spreads and more slippage.