| What it means: The average daily trading volume of a stock over a known period of days. The period most commonly used is 50 days. Traders compare the day's trading volume versus the average volume to gauge the size of the demand (or lack of) for a stock. Simply put, an up day on a huge increase in volume is viewed as a stock being "accumulated". A down day on a huge increase in volume is viewed as a stock being "distributed". Investment decisions should not be based on just this one measure. Moreover, using 1 day as a sample can also give misreadings. For further learning, read Investors Business Daily |
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