Asked by John  |  Submitted March 06, 2014

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

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  Answers  |  2

March 07, 2014

Volatility is more about the balance of buy to sell orders than the daily volume.

$commenter.renderDisplayableName() | 09.27.20 @ 16:53


March 31, 2016

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.

$commenter.renderDisplayableName() | 09.27.20 @ 16:53