Volume Of Trade

Look at that volume. No, not of our hair.

The volume of trade measures the number of trades of a security, usually within a trading day. A high volume trade day means that security was traded a lot. Hot stuff. Think: '80s hair. Low volume trading means that security was having few trades...a flat hair day. Hey, it happens to the best of us.

Volume of trade is measured and easy to find for all kinds of things: stocks, bonds, futures, options, commodities—pretty much everything, except for some special things, like exotic options with flexible terms, and some over-the-counter trades.

Why bother looking up trade volume? Well, like many things, it’s an indicator. For instance, high trade volume means high liquidity for that security. It can also mean something...happened. Maybe a political announcement. You can expect to see the volume of trade for futures rise when investors are feeling a bit iffy about the stock market, or in general when an anticipated change is about to occur. Sometimes, the stock market is a self-fulfilling prophecy.

Keep in mind though: typically, Mondays and Fridays are naturally higher, since people are aware of waiting for the long weekend ahead.

If you’re a long-term investor, you can ignore volume of trade, like most things...but if you’re a trader, a scrappy DIY market hooligan, the volume of trade will be a basic indicator for you to keep an eye on.