What Are Active Stocks?

Active stocks are heavily-traded stocks on an exchange. Active stocks are frequently bought and sold, and often have a large number of outstanding shares. Because they are heavily traded, active stocks often have low bid-ask spreads.

Key Takeaways

  • Active stocks are heavily-traded stocks on an exchange or stocks that display a sizeable price movement within a single day.
  • There is no specific volume benchmark to define an active stock.
  • News developments–such as tender offers for the company or positive earnings–or a large number of shares outstanding drive the high volume of trading for active stocks.

Understanding Active Stocks

Active stocks frequently have a large number of outstanding shares. Because they are heavily traded on a daily basis, and are usually available in high volume, active stocks often have a low bid-ask spread and are usually considered to have high liquidity. Active stocks tend to trade regardless of whether the price of the stock is fluctuating.

Stocks that comprise indices such as the S&P 500 are typically active stocks. Companies such as Apple, Microsoft, AT&T, Amazon, Ford, General Electric, Target, and Wal-Mart are all active stocks because they all experience high daily trading volume.

There is no benchmark for determining the volume of what can be considered an active stock. Some analysts define active stocks as trading at one or two million shares per day. On average, more than 250 stocks in the U.S. trade more than five million shares per day.

While active stocks are usually indicated by volume, the term can also sometimes apply to sizable price movement, and most outlets will distinguish the difference between an active stock based on volume and an active stock based on price.

Exchanges and traders list active stocks every day with the volume and the day's gain or loss. Stocks may be actively traded because they have a large number of shares outstanding, or because of a special situation. For example, if there is a tender offer for the company or because of unexpected news.

Most Active Stocks

Exchanges such as NYSE and NASDAQ provide daily listings of Most Active Stocks, typically restricted to the top 10 or 20 stocks with the highest volume of trade on any given day. Most Active Stock listings are similar from day to day, including stocks featured in major indices such as the S&P 500. From day to day, this list changes as a result of market forces, and is not restricted to stocks. Bonds, currency, ETFs, and futures all regularly appear on Most Active Stocks lists.

Most Active Stocks lists are attractive tools for traders of all experience levels, and day traders tend to watch Most Active Stocks lists for stocks with high volume and significant price fluctuations.