3 month average daily volume
This is the simple average of daily trading volume of a security going back over the previous 3 months. If the average volume of security is high it shows that lot of people are willing to trade in the security and trades in the security can be easily executed.
|Company name||3 month average daily trading volume|
In the above example in case of company A, on an average 8 lakh shares of the company are being bought and sold on daily basis over the previous 3 months. So if a person is looking to buy 1000 shares the order will be easily executed. However in case of company B, the 3 months average trading volume is just 4,500 shares and an order to trade 1000 shares is approximately 22% of all orders on any given day. If the trader is looking to buy, share prices of company B will start trending up because of the huge volume in flow. Similarly share prices will tank if B is looking to sell large number of shares at single go in an illiquid stock.