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In , volume, or trading volume, is the amount (total number) of a security (or a given set of securities, or an entire market) that was traded during a given period of time. In the context of a single stock trading on a stock exchange, the volume is commonly reported as the number of shares that changed hands during a given day. The transactions are measured on stocks, bonds, options contracts, and commodities.
The average volume of a security over a longer period of time is the total amount traded in that period, divided by the length of the period. Therefore, the unit of measurement for average volume is shares per unit of time, typically per trading day. The volume of trade is a measure of the market's activity and liquidity during a set period of time. Higher trading volumes are considered more positive than lower trading volumes because they mean more liquidity and better order execution.
Shifts in trade volume can make observed price movements more significant, a point often emphasized in volume analysis as a tool for identifying market trends and reversals. Higher volume indicates greater market liquidity. For institutional investors who wish to sell a large number of shares of a certain stock, lower liquidity will force them to sell the stock slowly over a longer period of time, to avoid losses due to slippage.
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