Investing and Stock Market Volume

Before investing in any stock, one major element that you have to look at is the company's daily volume.

The daily volume of a company (liquidity) is the amount of shares that are traded on any day.

tend to your investments

Most of the stocks that have minimal volume, 15,000 shares per day or less, have a problem, and there are numerous reasons you should try to avoid such low volume stocks.

One reason is that stocks with low volume often have very large price swings.

These fluctuations are due to the laws of supply and demand.

If there is only a few available sellers of the stock you want to buy, you are forced to pay what they want for the stock.

On the other hand, when you decide to sell the stock, you may be forced to keep the shares because there are no buyers of the stock, or to sell them in a really low price.

Since the low volume stock is "handled" by only a few persons, the stock is usually get hammered down harder than most stocks, and it is also more easily "treated" going up.

Stockholders of these type of companies are often very easily frustrated, and unless they are prepared to hold them for long periods, they very easily panic and sell their stock to the very first offer.

Nevertheless, you shouldn't judge companies solely on their average volume.

If the company's fundamentals are strong, you should not rule out the possibility of purchasing any stock of the company...

But you must do a very thorough research before making any final decisions


Share this Article:

Κατεβάστε δωρεάν την εφαρμογή "Charami SA" στο κινητό σας και πάντοτε θα έχετε άμεση και επίκαιρη ενημέρωση για όλα τα θέματα του κλάδου της υγείας, της ομορφιάς και της ευεξίας. Επιλέξτε το αντίστοιχο με τα ενδιαφέροντά σας "κουμπί" και περιηγηθείτε στο περιεχόμενό του!

By using this site you agree to our use of cookies.