Learn the stock market › Volume and volatility › Lesson 4 of 5

Volume on big moves

Short answerWhen a stock moves a lot, far more of it usually trades too. On the largest rises of the 20 largest US companies since 2010, volume in the middle was 2.7 times a normal day's, and on the largest falls 3.0 times. The day after, it was still 1.9 times normal.

What volume is, and why it is always the same for buyers and sellers, is in Volume: the bars under the price. Here the volume is compared on the days the price moved most.

Volume on the biggest days

Each day's volume is compared with the middle of the 50 trading days before. 1.0 is an entirely normal day and 2.0 twice as much. The biggest days are each company's 1% largest rises and falls, 806 days in all.

Day	Count	Volume against normal	At least double volume
All days	80,335	0.99×	6.1%
The largest rises	472	2.70×	71.6%
The largest falls	334	3.05×	82.0%
The day after	806	1.88×	45.3%
A week after	802	1.19×	17.7%

20 companies since 2010. The largest moves are each company's 1% largest rises and falls. Volume is compared with the middle of the 50 trading days before.

Counting all days, volume was at least double the normal on 6% of them. On the largest rises it was 72% and on the largest falls 82%.

The falls traded more than the rises, 3.0 times normal against 2.7.

Trading fades after a few days

The day after a big move, volume was still 1.9 times normal, and a week later 1.2. Trading peaks on the day itself and then fades.

What volume tells you, and what it doesn't

High volume shows that many traded, not why. It tends to come with an earnings report, a bid for the company or big news for the whole market, but the figure itself doesn't say which. Nor does it say whether the move will continue.

Test yourself

A stock fell 6% today on three times its normal volume. What does the volume tell you?