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All about Active Stocks in the US Stock Market

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All about Active Stocks in the US Stock Market

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Wish to benefit from the high liquidity ratios of the most active stocks in the US market? If that’s the case, you should definitely understand how the most active stocks can make a difference to your investment portfolio.  

What is an Active Stock?

Most active stocks are shares that have been heavily traded during a given time. In other words, stocks with the highest trade volumes are the most active stocks. While a daily trading cycle is generally the most common time frame used to assess these stocks, investors can also review weekly, monthly, quarterly, or yearly active stock data to make investment decisions. 

How to Determine Most Active Stocks?

While as mentioned above, most active stocks are the ones that have the highest trading volume within a selected time frame. However, there is no benchmark as to what qualifies as ‘most active stock volume’. As per some analysts, stocks with a trading volume of one or two million shares per day can be classed in the most active stock lists. 

Factors Behind Most Active Stock Volumes

A set of reasons often backs the high trading volume of a stock. For instance, if a company unveils its quarterly report or issues revised guidance or profit forecast, its stock trading volume may witness a change. Mergers, corporate news, and dividend announcements can also alter the trade volumes of a particular stock. 

The release of new information in the market can act as an impetus for stockholders to sell old shares or buy new ones. 

Are the Most Active Stocks Also the Most Profitable Ones?

As we’ve already mentioned, the reasons for high trade volumes may differ from one stock to the next. Some might be due to corporate policies, others might just be a response to the prevailing/changing market conditions. 

To this end, US indexes like NASDAQ and NYSE publish daily most active stock lists, along with lists of the largest market gainers and losers. Investors can also find this data categorised into sub-categories of ‘most active by share volume’ and ‘most active by dollar volume’. 

Why are Most Active Stock Lists Important?

Predict Market Trends

Most active stock lists help investors gauge the market and the broader trends in play. It helps them see what stocks and sectors have the investors’ attention. When assessed in conjunction with price, this information can be key to predicting the way the market will perform in the coming days.

High Interest Signals Liquidity

Most active stocks usually have high liquidity benefits. In other words, entering and exiting stock positions is easier without severely affecting their prices. 

How to Use the Most Active Stock List to My Advantage?

It is important to remember that most active stocks today can fall tomorrow. Thus, before you make a rash decision -to buy or sell- you should figure out a way to use these lists to your advantage. Here are a few key pointers that might help:

  • Privileging volume over value lists may help unless you have a significant amount of capital in hand. 
  • Pick one index to track the trading activity of the most active shares.
  • Pre-market active stock lists can be a good prelude to what to expect from the day.  

Can I Invest in the Most Active Penny Stocks?

If you are an investor with a high-risk appetite, you might consider bidding on the most active penny stocks. However, since these stocks are valued at less than $5, they aren’t listed on the major US stock exchanges. You can still assess their trade volumes as regular lists are published online. 

Summing It Up

People often assume that the most active stock list is only useful to day traders. While it is true that this list is one of the most important resources for day traders, it is equally significant for regular investors. 

As discussed earlier, most active stock lists can be interpreted as signals to buy, sell or hold shares. These lists, when assessed over a period of time - say weeks or even months- can paint a picture of the current market momentum and possible future trends and, thus, be a key component of your investment strategy. 

Learn more about US Stocks through this short video: https://www.youtube.com/shorts/MfWI3aPYlBg

Frequently Asked Questions

1. What does most active stocks mean?

Most active stocks are shares that are most heavily traded during a particular trade window. While generally, this refers to a single day’s trading cycle, investors can also assess weekly, monthly, quarterly and yearly lists of the most active stocks. 

2. Which stocks increase day by day?

As such, there’s no guarantee of any stocks increasing day-by-day as stock valuations change as per changing market conditions. Currently, Dexcom, NetEase, Alibaba, TripAdvisor and Cisco Systems are among some of the chief market gainers in the US market. 

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