Dollar Volume Liquidity
Definition of 'Dollar Volume Liquidity'A stock or exchange-traded fund's share price times its average volume. Dollar volume liquidity is important to institutional investors because they make such large trades. When a stock is highly liquid, it is easy to enter and exit positions and easy to buy and sell without influencing the stock's price. There will also be a very small bid-ask spread. Dollar volume liquidity is also important to small cap investors because small company stocks may not have the same liquidity that investors can take for granted with a large cap stock. |
|
Investopedia explains 'Dollar Volume Liquidity'When there is a high level of investor interest and a stock or ETF is traded on a major exchange, it will tend to be highly liquid. High dollar volume liquidity is generally a positive sign, but investors employing certain strategies, such as trying to get into a stock before it becomes popular, might actually prefer stocks with low dollar volume liquidity. Another way of looking at the ease of buying and selling a stock is share volume liquidity, which is simply the number of shares traded in a day. |
Related Definitions
Articles Of Interest
-
4 Common Active Trading Strategies
Learn four of the most popular active trading strategies and why active trading isn't limited to professional traders anymore. -
Profit Without Predicting The Market
Traders who try to predict the future can actually harm their trading options. -
Using Feedback To Improve Your Trading
Positive and negative trading experiences can affect the way you trade. Find out how. -
A Primer On The MACD
Learn to trade in the direction of short-term momentum. -
War's Influence On Wall Street
Blitzkrieg? Dawn raids? Sounds like the markets and the battlefield have a few things in common. -
When To Short A Stock
Learn how to make money off failing shares. -
A Top-Down Approach To Investing
Use a global view to determine which stocks belong in your portfolio. -
Top 4 Most Scandalous Insider Trading Debacles
Here we look at some of the landmark incidents of insider trading. -
Market Summary for September 6, 2013
The major U.S. indices moved lower this week, after a lackluster jobs report sent shares lower on Friday morning. -
Market Summary for August 30, 2013
The major U.S. indices moved lower this week, but remain within long-term price channels. Traders should watch for breakouts or breakdowns from these price channels for the best opportunities.
Free Annual Reports