Average Daily Traded Volume (ADTV)

Average daily traded volume is the average number of individual shares traded in a day over a specified period of time. When the average daily trading volume of a security is high, it is traded more actively and typically has a narrow spread. If the average trading volume is low, the interest among the market participants for those securities is low, resulting in inefficient prices due to lack of trading.

Trading volume is an important indicator to understand momentum in the security prices. When average daily trading volume is large, the buyers or sellers present in the market are able to sustain their respective activities which helps in better price discovery.