How markets work
Volume
The number of shares or contracts traded in a period — a measure of how much activity there was.
How it works
Volume is the standard proxy for interest and liquidity. High volume means many participants and usually a reliable price; low volume means the last trade may not represent much.
Volume is most informative in context. A day’s volume matters relative to that security’s own average, not in absolute terms — 2 million shares is enormous for one company and a quiet morning for another.
Where it misleads people
Every trade has a buyer and a seller, so volume can never tell you whether there was "more buying than selling". That phrase is meaningless as a description of volume, however often it is used.
Related terms
- LiquidityHow quickly you can turn something into cash at a fair price, without moving the price against yourself.
- Average daily volumeThe typical number of shares traded per day, usually averaged over the last month or quarter.
- VWAPThe average price a security traded at over a period, weighted by how much traded at each price.
- Order bookThe live list of every outstanding buy and sell order, arranged by price.
Mentioned in
More in How markets work
- Adjusted close
- After-hours trading
- TWAP
- Algorithmic trading
- Slippage
- Short squeeze
- Short selling
- Best execution
All 33 How markets work terms · The full glossary, 433 terms
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