Why does volume matter for your own orders?
Volume isn't just chart-reading — it's the practical answer to "how easily can I get in and out?" Liquidity is that ease: how much of something can be bought or sold, at short notice, without moving its price against you. This lesson closes the loop with the spreads and market makers you met in Courses 1 and 2, turning three concepts into one picture.
The liquidity trinity
Volume, spread and market-maker presence are the same phenomenon seen from three angles:
- Heavy daily volume → many participants → competing market makers → tight spreads → your orders barely dent the price.
- Thin volume → few participants → reluctant, cautious quoting → wide spreads → even modest orders move the market against you.
That's why Course 1's screener exercise found penny-wide spreads on giants and gulf-wide ones on obscure names. You were photographing liquidity; now you own the theory.
Size relative to the pool
A useful professional habit: compare an order's size to the stock's average daily volume. Buying 100 shares of a company that trades 50 million a day is a raindrop in a river. Buying 10,000 shares of one that trades 40,000 a day is a quarter of the day's entire market — expect to move the price you're trying to pay, possibly badly. (This is precisely why Course 2's institutions slice big orders across days and dark pools.)
Liquidity as a risk of its own
Thin securities carry a hidden exit tax: the market that let you in comfortably on a calm Tuesday may be nearly absent on a stressed Friday — spreads gape widest exactly when you most want out (fair-weather liquidity, Course 2). Professionals treat "how liquid is it?" as a first-class risk question, ranking beside "is it good?" — a habit worth stealing early.
In the data
The size of the pool is one number: the average daily volume, a rolling average of the last twenty or thirty sessions, recomputed every day. Here it is for a giant and for a minnow — Apple, and Saga Communications, a Nasdaq-listed company worth tens of millions of dollars:
Two things to read into them. The window counts trading sessions, not calendar days, so twenty sessions is about four weeks. And a count of shares does not compare across companies, because a share means nothing between a $20 stock and a $500 stock; multiply the average by the share price and you get the money that changes hands on a normal day, which is the version that does compare.
Try it now
- Find average daily volume for a large company and for a small one: the two tables above. For your own anchor company, open it in the Terminal and change the symbol there.
Open AAPL.US in the EODHD Terminal
- Compute what fraction of each day's trading a hypothetical 1,000-share order would be, for both.
- One sentence per stock: "my order is a raindrop / a splash / a wave here." Order-size humility — installed.