CandleFocus Glossary Editor.png)
Average Daily Trading Volume, or ADTV, is a measure of how many shares of a stock were traded over a particular period. It offers investors a clue as to how active a stock is being traded, which can provide insight into market sentiment, as well as its potential popularity or desirability.
ADTV is typically calculated over a period of 6 months. To do this, the total trading volume over the course of a certain number of days is added up and then divided by that number. For example, the 20-day ADTV could be computed by adding up the trading volume of the last 20 days and then dividing by 20.
High levels of average daily trading volume can indicate that a stock may be in greater demand. It may also indicate that investors are buying and selling the stock more frequently or in larger volumes than usual. This could suggest that something is changing in the stock that is attracting more interest, and the implications could be either bearish or bullish depending on which direction the stock is headed.
Conversely, a decrease in average daily trading volume can indicate that investor interest in the stock is waning. However, a stock’s declining volume can still be useful because when a higher level of volume returns, there is often a noticeable price push as well.
In conclusion, average daily trading volume is an important tool that investors can use to gain a better understanding of the activity in a particular stock. By monitoring the average daily trading volume of a stock, investors can get a sense of market sentiment and the overall popularity of a security.
ADTV is typically calculated over a period of 6 months. To do this, the total trading volume over the course of a certain number of days is added up and then divided by that number. For example, the 20-day ADTV could be computed by adding up the trading volume of the last 20 days and then dividing by 20.
High levels of average daily trading volume can indicate that a stock may be in greater demand. It may also indicate that investors are buying and selling the stock more frequently or in larger volumes than usual. This could suggest that something is changing in the stock that is attracting more interest, and the implications could be either bearish or bullish depending on which direction the stock is headed.
Conversely, a decrease in average daily trading volume can indicate that investor interest in the stock is waning. However, a stock’s declining volume can still be useful because when a higher level of volume returns, there is often a noticeable price push as well.
In conclusion, average daily trading volume is an important tool that investors can use to gain a better understanding of the activity in a particular stock. By monitoring the average daily trading volume of a stock, investors can get a sense of market sentiment and the overall popularity of a security.