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Originally Posted by terra1174
Hi guys i'm new to this website! so anyway i'm quite curious about the 'volume' of a certain company. now that i know the definition of 'volume', does it play an important role when choosing certain companies to trade stocks with? or does it represent anything, say the size of the company?
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Hi there Terra. Great to have you in the community, and welcome!
That is a very good question. Volume can play a big role when choosing certain companies to trade stock with. Since we know that volume is the number of shares that exchanges hands per day, depending on what our strategy is, we may want more or less volume. The
more volume that is traded, the less our money will affect a stock's price, and the
less volume that is traded, the more our money will affect a stock's price.
As for your second question, volume cannot really be used to tell how big a company actually is. The market capitilization (market cap) is found by multiplying the number of shares by the current price of the stock. So, stock XYZ is trading at $10 per share, and has 1 million shares, well that stock is worth $10 million dollars (10 x 1 million).
I hope this helps, and just remember these two sentences:
1. The
more volume, the
less you will affect a stock's price by buying; the
less volume, the
more you will affect a stock's price by buying
2. A company's worth (market cap) is found by multiplying the number of shares by the last price of the share.
The simpler you keep things, the easier it is to follow
. Welcome again to the community Terra. If you need anything at all please feel free to private message (PM) me. I look forward to seeing you around!
Best Regards,
-Blain
!!
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