Word of the Week!
Monday, February 25th, 2008The word of the week for this week is Volume. When we refer to volume, this is referring to the number of shares that are traded for a stock in a given day. Volume can be a very important indicator of the health of a stock. The higher the volume, the more buying or selling interest there is for it. When a stock has low volume, it means that most people aren’t following it, and there is little interest in the stock. When there is low volume, it also means that the stock is not very liquid. If you wanted to sell/buy it, there may not always be another party to take part in the trade. Another useful tool for dealing with volume is checking how the current volume compares with the average volume over the last 30-90 days. This can give you an idea of whether or not the stock is becoming more or less popular.