Definition of Average Daily Volume

The average number of securities traded per day over a specific period of time is known as the average daily volume.

The average trading volume can increase or decrease according to the changing views of the public regarding a security. The average trading volume influences the price of a stock.

Points to remember:

• Greater the average trading volume, greater the liquidity of a stock.
• In case of a low trading volume, the risk of price changes is high. This is because a smaller number of orders placed at varying intervals may move the price by large amounts every time they get executed.
• The average daily volume is a measure to determine the overall market liquidity of a stock.