Bob Brinker's Marketimer

  Tuesday November 21, 2017

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WHAT IS MARKET VOLUME?
Learn even more about this topic with the Encyclopedia of Personal Finance™

Market volume is the amount of trading done in a day. Usually, market volume is a measure of a specific stock market. For example, one measures the volume of trading at the New York Stock Exchange, or the NASDAQ, or the Chicago Board of Options Exchange.

Market volume is commonly measured in different ways. The first is by adding up the number of shares bought or sold on a given day. Another method sums the total dollar value of transactions for the day. The volume of trading gives investors a sense of the amount of activity in the stock market during the day, and may provide signals to the future course of the stock market.

Market volume is also measured in terms of the number of stocks that increased in value (advancing issues) compared to the number of stocks that decreased in value (declining issues) during the day. This measure is called the advance-decline line (or A-D line for short). The market is said to have good breadth when there is a higher volume of advancing issues than declining issues?for example, when a wide variety of companies participated in a market rally.

Now that you understand market volume, let's look at the signals that volume provides to investors about the future course of the stock market.




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