May, 2012 5:23 AM
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Average Daily Volume
The average daily volume represents the typical trading activity for one day. It is calculated by dividing the annual trading volume by the number of trading (working) days in that year.
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Average daily trading volume (or ADTV) is a helpful tool in determining the liquidity of a market and in identifying sharp changes in trading patterns. These are usually indicative of circumstances that may be of relevance to shareholders and traders.
When ADTV is high it means that the respective stocks are more competitive; they can be easily traded and have high liquidity. Normally, shares with high ADTV are quite stable, since only trading them in huge volumes would affect their price. Shares with low ADTV tend to sell at lower prices.
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