Do stocks that trade with a large daily volume generally have less volatility?

Asked by John

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Answered by Alex Bentley, Financial AdviserPRO+ in Pacific Palisades, CA
Volatility is more about the balance of buy to sell orders than the daily volume. | 03.07.14 @ 17:48
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$commenter.renderDisplayableName() — {comment} | 12.04.16 @ 18:45
Answered by Dave Bradley, Investment Manager (Financial Advisor) in North Charleston, SC
High John D,

Certainly volatility varies with the trading volume. Digging deeper, it is less about the number of shares traded, than the bid price of the shares trading, and the folks purchasing the shares.

If more shares are purchased at a higher price. The share price goes up. If more shares are purchased at a lower price. The share price goes down.

One aspect many folks have difficulty with is when the average trading volume in a day is relatively small (maybe less than 1% of the shares available) but the price moves more than 1% either up or down. In IM (Investment Management) with term this; Mr. Market being irrational. | 03.31.16 @ 22:05
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$commenter.renderDisplayableName() — {comment} | 12.04.16 @ 18:45
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Answered by

Alex Bentley
Alex Bentley, Financial AdviserPRO+ in Pacific Palisades, CA