Average Daily Trading Volume - ADTV

DEFINITION of 'Average Daily Trading Volume - ADTV'

The average amount of individual securities traded in a day or over a specified amount of time. Trading activity relates to the liquidity of a security; therefore, when average daily trading volume is high, the stock can be easily traded and has high liquidity. As a result, average daily trading volume can have an effect on the price of the security. If trading volume isn't very high, the security will tend to be less expensive because people are not as willing to buy it.

BREAKING DOWN 'Average Daily Trading Volume - ADTV'

When average daily trading volume increases or decreases dramatically, this is a signal that there has been some news released that has affected people's views on the security. Usually, higher average daily trading volumes mean that the security is more competitive, has narrower spreads and is typically less volatile. Stocks are less volatile when they have higher average daily trading volumes because much larger trades would have to be made to have an effect on the price.

RELATED TERMS
  1. Liquidity

    The degree to which an asset or security can be quickly bought ...
  2. Spread

    1. The difference between the bid and the ask price of a security ...
  3. Contract Size

    The deliverable quantity of commodities or financial instruments ...
  4. Volume

    The number of shares or contracts traded in a security or an ...
  5. Volatility

    1. A statistical measure of the dispersion of returns for a given ...
  6. Most Active

    The stocks on an exchange that had the highest volume over a ...
Related Articles
  1. Mutual Funds & ETFs

    The 3 Best Frontier Markets Index Funds (FM)

    Discover how you can get immediate exposure to frontier-market equities by investing in one of the top exchange-traded funds targeting these markets.
  2. Mutual Funds & ETFs

    The Top 5 ETFs to Track the Euro Stoxx 50 for 2016 (FEZ, HFEZ)

    Learn about a handful of the world's top ETFs designed to provide exposure to large-cap eurozone equities through the EURO STOXX 50 Index.
  3. Mutual Funds & ETFs

    The Top 3 ETFs to Track the Dow Jones Industrial Average for 2016

    Learn about exchange-traded funds that track the Dow Jones Industrial Average. Read how compounding impacts the results of inverse and leveraged ETFs.
  4. Stock Analysis

    Should Chipotle Consider a Stock Split? (CMG)

    Learn why it might be good for Chipotle to enact a stock split. Discover why some investors are bearish on the company's prospects.
  5. Stock Analysis

    The 3 Most Shorted Dow Stocks (V, CAT)

    Read about three heavily shorted stocks that are components of the Dow Jones Industrial Average, including one company with recent success.
  6. Mutual Funds & ETFs

    Top 4 Treasurys ETFs (SHY, IEI)

    Learn about the specifics of the top four U.S. Treasury ETFs and how investors can buy ETFs that invest in bonds along the yield curve.
  7. Options & Futures

    Volatility - The Birth Of A New Asset Class

    Learn more about the trading possibilities with the VIX.
  8. Options & Futures

    How To Read The Market's Psychological State

    Discover what on-balance volume, accumulation/distribution and open interest can tell you about the market mood.
  9. Options & Futures

    Options Trading Volume And Open Interest

    Learn how these two statistics can give you an edge in trading options.
  10. Stock Analysis

    Are U.S. Stocks Still the Place To Be in 2016?

    Understand why U.S. stocks are absolutely the place to be in 2016, even though the year has gotten off to an awful start for the market.
RELATED FAQS
  1. What types of stocks have a small difference between bid and ask prices?

    Generally, stocks that offer high liquidity have tight bid-ask spreads. Stocks that have a high volume and trade on a daily ... Read Full Answer >>
  2. What types of stocks have a large difference between bid and ask prices?

    The bid-ask spread is the difference between the highest offered purchase price and the lowest offered sales price for a ... Read Full Answer >>
  3. Why is trading volume important to investors?

    Trading volume, or volume, is the number of shares or contracts that indicates the overall activity of a security or market ... Read Full Answer >>
  4. Who was the first person charged by the SEC?

    This dubious honor belongs to Michael J. Meehan. Meehan was a stock market manipulator who operated in the stock pools that ... Read Full Answer >>
  5. Do stocks that trade with a large daily volume generally have less volatility?

    Stock volatility refers to a drastic decrease or increase in value experienced by a given stock within a given period. There ... Read Full Answer >>
  6. How do I measure option liquidity?

    An option is a financial instrument that gives the holder the right to purchase shares in a company at a certain set price ... Read Full Answer >>
  7. What number of shares determines adequate liquidity for a stock?

    Liquidity refers to how easy it is to buy and sell shares without seeing a change in price. If, for example, you bought ... Read Full Answer >>
  8. What are the determinants of a stock's bid-ask spread?

    Stock exchanges are set up to assist brokers and other specialists in coordinating bid and ask prices. The bid price is the ... Read Full Answer >>
Hot Definitions
  1. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  2. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  3. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  4. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  5. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
Trading Center