How markets work
Average daily volume
Also called ADV
The typical number of shares traded per day, usually averaged over the last month or quarter.
How it works
ADV is the practical measure of how large an order a security can absorb. A common rule among institutions is to keep a single day’s trading well under a small percentage of ADV, precisely to avoid moving the price.
For a private investor the number is mostly a warning signal: a holding whose ADV is a few thousand shares is one where getting out in a hurry will cost you.
Related terms
- VolumeThe number of shares or contracts traded in a period — a measure of how much activity there was.
- LiquidityHow quickly you can turn something into cash at a fair price, without moving the price against yourself.
- SlippageThe difference between the price you expected and the price you actually got.
- Market impactThe extent to which your own order moves the price against you as it executes.
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- Algorithmic trading
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All 33 How markets work terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.