Dollar Volume Liquidity

Dictionary Says

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 Says

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.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. High-Frequency Trading - HFT

    A program ...
  2. Price-To-Sales Ratio - Price/Sales

    A ratio for ...
  3. Enterprise Value - EV

    A measure of a ...
  4. Market Capitalization

    The total dollar ...
  5. Price-Earnings Ratio - P/E Ratio

    A valuation ...
  6. Volume

    The number of ...
  7. Liquidity

    1. The degree to ...
  8. Exchange-Traded Fund - ETF

    A security that ...
  9. Risk

    The chance that ...
  10. Universe Of Securities

    A set of ...

Articles Of Interest

  1. 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.
  2. Using Feedback To Improve Your Trading

    Positive and negative trading experiences can affect the way you trade. Find out how.
  3. Profit Without Predicting The Market

    Traders who try to predict the future can actually harm their trading options.
  4. Technical Analysis: The Basic Assumptions

    Learn how chartists analyze the price movements of the market. We'll introduce you to the most important concepts in this approach.
  5. Tips For Controlling Investment Losses

    A profit/loss plan helps investors recognize mistakes and invest logically, rather than emotionally.
  6. Triple Screen Trading System - Part 4

    How can a trader use the Elder-Ray oscillator as the second screen of this system? Find out here.
  7. Triple Screen Trading System - Part 3

    Learn about market wave, the second screen in this three-part system.
  8. Triple Screen Trading System - Part 2

    Market tide is the basis for making trading decisions in this three-part system.
  9. Triple Screen Trading System - Part 1

    Learn to take advantage of both trend-following and oscillator techniques to analyze your trading decisions.
  10. Triangles: A Short Study In Continuation Patterns

    Learn how to read these formations of horizontal trading patterns.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center