High volume stocks are the shares that trade the most in a given period, usually measured by the number of shares traded per day. High volume makes a stock liquid: bid-ask spreads tend to be tight and you can enter or exit a position quickly without moving the price much. High volume does not by itself mean low volatility; volume often spikes when news hits a company, and price can move sharply on those days.
Why look at high volume stocks?
High volume stocks are easier to trade. With many buyers and sellers, the gap between the bid and ask is usually small, so the cost of getting in and out is lower, and you are less likely to be stuck in a position with no one on the other side.
Volume also shows interest. When volume jumps, something has changed: news, earnings, an index change or a large investor trading. Understanding why volume rose matters more than the rise itself.
How to read volume together with price
Volume is most useful alongside price:
- Rising price on rising volume suggests broad buying interest behind the move.
- Rising price on falling volume suggests interest may be fading, which can precede a reversal.
- A sharp volume spike on news can go either way; check whether the news changes the company's outlook before trading on it.
- Compare with history. Judge today's volume against the stock's own average, such as its 3-month average daily volume, rather than against other stocks.
- Do not trade on volume alone. Use it with price trend, fundamentals and your own risk limits.
Low liquidity can also trap traders. In the January 2021 GameStop short squeeze, heavy short interest and a surge of buying left short sellers covering at rapidly rising prices, which shows how crowded positions can become costly to exit.
How to find high volume stocks with MarketXLS
MarketXLS is an Excel add-in with a library of 1000+ functions, including volume functions. Enter a list of tickers in a column, add =Volume("AAPL") for today's volume and an average-volume function for comparison, then sort the column to see the most heavily traded names. Comparing today's volume with the average highlights unusual activity.
Related guides: filter high volume penny stocks with MarketXLS, stock market technical analysis for beginners, and technical indicators for swing traders.
The bottom line
High volume stocks offer liquidity and tight spreads, and volume changes signal shifts in investor interest. Read volume together with price and news, and use it as one input among several. This article is educational and not investment advice.
Disclaimer: None of the content published on marketxls.com constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. The author is not offering any professional advice of any kind. The reader should consult a professional financial advisor to determine their suitability for any strategies discussed herein.
