what is a good volume for stocks?

This guide answers what is a good volume for stocks, explaining ADTV, dollar volume, relative volume, VWAP and practical rules of thumb for traders, investors, and institutions. Includes checklist,...

2025-09-23 05:20:00

By Nexus Link

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What is a good volume for stocks?

Short overview

Trading volume is the count (or dollar value) of shares traded in a period. When people ask "what is a good volume for stocks", they mean the level of trading activity that gives sufficient liquidity, tight spreads and reliable price action for their intended trade size and time horizon. This article explains volume concepts (ADTV, average dollar volume, relative volume, VWAP), why volume matters, practical rules of thumb for different trader types, step-by-step checks you can run before trading, tools to measure volume, and example scenarios. By the end you will have a repeatable checklist to decide whether a stock's volume is "good" for your needs and how to reduce execution risk.

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Definition and basic concepts

What "volume" means

Volume is the number of shares (or contracts) traded in a given time period — commonly reported as daily volume for stocks. Exchanges and consolidated tape feeds publish the count of shares that changed hands. Most retail platforms show two common fields: "Volume" (today's traded shares) and "Avg Volume" (an average over a window). Volume can also be reported as dollar volume (shares × price), which is often more informative for larger trade sizes.

Average Daily Trading Volume (ADTV)

Average Daily Trading Volume (ADTV) is the arithmetic average of daily share counts over a look-back window (commonly 20, 50 or 90 trading days). Traders use averages because single-day volume can spike or drop due to news or one-off flows. Typical look-back windows:

20-day ADTV: responsive to recent changes, useful for short-term trading.
50-day ADTV: balanced view used by many swing traders.
90-day or 200-day ADTV: smoother long-term baseline for institutional sizing.

Using ADTV rather than a single-day figure reduces noise and gives a better sense of the normal liquidity you can expect.

Why volume matters

Liquidity and execution

Higher volume generally means more liquidity: orders are easier to fill at or near quoted prices, and slippage is lower. Low volume can produce wide bid-ask spreads and poor fills — a small market order can move the price materially.

Confirmation and market conviction

Volume helps confirm price moves. A breakout on high volume is more likely to represent real buying conviction; a breakout on low volume is more likely to be a false signal.

Price discovery and volatility

Volume both reflects and creates volatility. Heavy trading concentrates price discovery and can reduce ephemeral gaps, but it may also amplify moves when buyers or sellers dominate. Understanding volume helps you interpret whether a price change is transient or meaningful.

How volume is measured and related metrics

ADTV (Average Daily Trading Volume)

How it's calculated

ADTV = (sum of daily volumes over look-back window) ÷ number of days. Common windows: 20, 50, 90 days. ADTV is your baseline for normal liquidity. If today's volume is twice the ADTV, the stock is trading with elevated interest.

Role as baseline for liquidity assessment

Compare your intended order size to ADTV to estimate market impact and whether you need to split an order, use limit orders, or route to an algorithmic venue.

Average Dollar Volume

Definition and role

Average dollar volume = ADTV × average share price. Dollar volume matters more to larger traders because it better reflects the capital required to trade and the market depth at various price levels. For example, a $1 stock with ADTV 10 million shares has $10M average dollar volume, while a $100 stock with ADTV 100,000 shares also has $10M dollar volume — the liquidity available to move $10M is comparable between them.

Relative Volume (RVOL)

Definition

Relative volume (RVOL) = current-period volume ÷ normal/average volume for the same period. Intraday platforms often show RVOL by comparing the first X minutes' volume to the historical average for that minute range.

Use

RVOL highlights unusual interest. An RVOL of 3 means volume is three times normal and traders/institutions are likely active.

VWAP and volume indicators (OBV, Volume Profile)

VWAP (Volume-Weighted Average Price)

VWAP gives the average price participants paid weighted by volume. Institutional traders use VWAP as a benchmark: executing near VWAP implies average execution quality.

On-Balance Volume (OBV)

OBV accumulates volume on up-days and subtracts on down-days to suggest whether volume supports the direction of price.

Volume Profile

Volume Profile (or market profile) shows executed volume at each price level over a period. It identifies price levels where trading concentrated (high-volume nodes) and potential support/resistance.

Rules of thumb: what counts as "good" volume (context-dependent)

Trader/timeframe dependence

Acceptable volume depends on trading style. The same stock can be "good" for a long-term investor but not for a scalper. Always judge volume relative to your order size and time horizon.

Common practical guidelines (rules of thumb)

Day traders / scalpers: prefer very high ADTV (hundreds of thousands to several million shares/day for many equities). High dollar volume ensures tight spreads and quick fills. For liquid large-caps, ADTVs often exceed tens of millions of shares/day.
Swing traders / retail position traders: often target ADTVs in the low hundreds of thousands or higher, depending on position size. Scaling in and out and using limit or iceberg orders helps when ADTV is modest.
Large institutional traders: look at average dollar volume. A frequently cited heuristic is roughly $20 million/day as a minimum for institutional-sized trades with manageable market impact; $80 million+/day is considered more robust for very large flows. These are heuristics, not absolutes.

Important: these are guidelines — the right threshold depends on intended share size, acceptable slippage, and the market context (earnings, shells, news-driven spikes).

How to determine sufficiency for your trade size

Four practical questions to ask before trading

How many shares will I trade?
What is the stock's ADTV and average dollar volume?
How long will I hold the position (intraday, days, months)?
What spread/slippage is acceptable for my P&L or risk rules?

Simple calculation examples

Example A — Retail swing trade

Stock ADTV: 500,000 shares/day.
Share price: $30 → average dollar volume ≈ $15M/day.
Intended buy size: 5,000 shares ($150,000) — ~1% of ADTV.

Rule of thumb: For retail sizes, keeping orders under ~1%–3% of ADTV reduces visible market impact. At 1% of ADTV, expect modest slippage if you use smart limit or time-sliced orders.

Example B — Institutional block

Stock ADTV: 10M shares/day.
Share price: $50 → dollar volume $500M/day.
Intended buy size: 1M shares ($50M) — 10% of ADTV.

At 10% of ADTV, executing all at market will have substantial impact. Institutions break the order into algos (TWAP/VWAP implementation) and possibly work in dark pools to reduce footprint. This is why dollar volume and ADTV matter.

Example C — Quick scalper

Target ADTV: several million shares/day and average dollar volume in the tens of millions. Scalpers need tight spreads; a small retail spread can wipe out scalping profits.

Using volume in trade decision-making

Confirming breakouts and breakdowns

A price breakout accompanied by above-normal volume increases conviction that the move reflects real demand. Conversely, breakouts on low volume are more likely false moves.

Spotting accumulation/distribution and institutional activity

Relative spikes in volume with price moving up suggest accumulation; heavy volume on down moves suggests distribution. Large, sustained volume spikes relative to ADTV often indicate institutional flow.

Divergences and trend fatigue

If price is rising but volume is falling, momentum may be weakening; similarly, price dropping on low volume can signal lack of conviction among sellers. Volume divergences can be an early warning of trend fatigue.

Factors that influence volume

Company/news-driven events

Earnings, guidance changes, management news, mergers and acquisitions, regulatory announcements, and macro headlines temporarily increase volume.

Structural drivers

Market capitalization and float (shares available to trade), index inclusion or removal, ETF creation/redemption flows, and listed options activity can all raise or lower typical volume.

Market microstructure

Market makers, liquidity providers, dark pools, and extended-hours trading change where and how volume is reported and executed. Off-exchange (dark) trades and block trades may not be visible in the lit tape immediately.

Limitations and caveats

Manipulation, wash trading, and misleading spikes

Volume alone is not definitive proof of sustainable buying or selling. Wash trades, manipulative patterns, and short-term cross-venue execution can cause misleading spikes.

After-hours volume and cross-venue reporting differences

Extended-session trades and off-exchange venues can distort intraday perceptions of liquidity; ADTV usually focuses on regular session volume unless otherwise specified.

Low-float and penny stocks

Low-float stocks can see small volumes trigger large percentage moves; signals based on volume in these names are less reliable. Penny stocks and microcaps carry special risks due to thin liquidity and higher manipulation probability.

Practical checklist for evaluating whether a stock’s volume is "good" for you

Quick step list (use before any trade):

Check ADTV (50-day and 20-day) and note recent trends.
Compute average dollar volume (ADTV × current price).
Compare current RVOL to normal intraday levels (is volume spiking?).
Inspect the bid-ask spread and depth at NBBO (top 5 levels if available).
Estimate market impact: planned order size as % of ADTV and acceptable slippage.
Look for news or structural drivers explaining volume change (earnings, index rebalancing, options expiries).
Decide execution method: limit orders, time-sliced algos, dark pools, or working the order with a broker.

Use the checklist every time you significantly change size or strategy.

Tools and data sources

Where to get reliable volume metrics and indicators

Brokerage platforms: your broker typically provides ADTV, VWAP and intraday volume details. Consider Bitget for exchange execution and Bitget Wallet for custody and on-chain flows when relevant.
Charting platforms: TradingView and similar chart services provide RVOL, volume profile and OBV overlays.
Public data portals: Yahoo Finance and similar sites show daily volume and average volume figures.
Professional feeds: Bloomberg, Refinitiv and exchange feeds provide consolidated tape and deep market data for institutional use.

How to access ADTV, VWAP, RVOL and volume profile

Most platforms let you change the moving-average window for ADTV and overlay VWAP on intraday charts. RVOL is often shown as an indicator with a default comparison window; volume profile is available as a study showing volume-at-price for a selected range.

Example scenarios and short case studies

Scenario 1: Daytrader choosing a high-ADTV name for scalping

Requirement: sub-penny spreads and deep top-of-book.
Choice: look for names with ADTV in the multiple millions and average dollar volume in the tens to hundreds of millions per day. For example, as of 2025-12-29 some mega-cap tech names had ADTV in the dozens to hundreds of millions of shares and average dollar volumes in the billions, which suits scalpers well. A daytrader will also watch RVOL spikes at market open and liquidation-related flows.

Scenario 2: Swing trader accepting lower ADTV and scaling in/out

Requirement: moderate liquidity, willing to scale over days.
Approach: select names with ADTV in the low hundreds of thousands. Use limit orders and stagger entries/exits over several sessions. Check average dollar volume relative to intended position size.

Scenario 3: Institutional trader focusing on average dollar volume and executing via algos

Requirement: move tens to hundreds of millions with controlled impact.
Approach: pick stocks with average dollar volume above institutional thresholds (many desks use $20M/day as a lower bound and $80M+/day for large, low-slippage trades), use VWAP/TWAP algos and dark liquidity to reduce signaling, and monitor volume profile for high-volume price nodes.

Example: real-world context and data (reporting date and sources)

As of 2025-12-29, according to aggregated market reports, traded volumes and averages varied greatly across major names. For example, Coca-Cola (KO) showed a reported Volume of about 215K shares with an Avg Vol of roughly 16M shares — illustrating how a headline volume of 215K can be small relative to its ADTV of ~16M. Nvidia (NVDA) reported active trading with a Volume near 1.4M on a day where Avg Vol was around 188M, showing how even large-cap tech names can have widely varying intraday volume relative to their large ADTV. Bitcoin trading across venues showed dollar volumes in the multi-billions per day (e.g., reported volume figures in the tens of billions on some dates). These figures underscore why comparing raw daily volume to ADTV and dollar volume matters when judging liquidity and expected market impact. (Reported figures are taken from market reports and company summary data as of 2025-12-29.)

Note: these quoted numbers are examples for illustration and come from public market summaries as of the date above.

Summary and practical takeaways

The short answer to "what is a good volume for stocks" is: a "good" volume is whatever level of trading activity meets your execution, risk and time-horizon needs. There is no single universal number.
Use ADTV, average dollar volume, relative volume and current spreads as your core checks.
Rules of thumb: scalpers prefer many millions of shares/day; swing traders commonly accept hundreds of thousands/day; institutions focus on dollar volume (e.g., heuristics like $20M/day minimum).
Before trading, run the checklist: ADTV, dollar volume, RVOL, spread, order-size as % of ADTV, and relevant news/structural drivers.

Further action: if you want execution tools and liquidity access, explore Bitget’s trading features and Bitget Wallet for integrated custody and on-chain workflows.