Average daily trading volume represents the average number of individual securities traded in a day or over a period of time.ADTV reflects a security’s liquidity, and can impact its price. If XYZ stock has a high ADTV, it’s easy to trade and has high liquidity. As a liquid stock, it’s competitive, and its price will likely climb. When a stock’s ADTV sharply changes from one day to the next, it means an event or some news has influenced people’s views on the security. Stocks are typically less volatile when they have higher ADTV because it requires larger trades to impact their price. ADTV can help investors confirm trends and patterns. If XYZ had been falling for the past month, and its price jumped 5% over the past week, a higher ADTV signals the reversal is for real. If the change in trend was accompanied by low volume, the trend may be misleading.