are stocks with a greater volume better to purchase?

Question

i'm doin a stock market game is skool.. and my professor wants us to purchase to stocks with $5000. I just don't know which one to purchase.. what do i base it on? Do I buy stock with greater volume or less volume? please help..

Answer 1

Volume isn't a great indicator of anything. Volume will tell you which companies trade the most shares - could be because they have a lower stock price and people own more (think trading 100 shares @ $1 versus 10 shares @ $10). The company's that have the highest volume tend to be more well known, but again, that doesn't mean it is a good time to buy.

If you don't have time to do a lot of research on individual stocks, I'd suggest thinking of a trend you know (a retailer you like, an industry that is doing well, a technology that will cause change) and buying stock in companies that will benefit.

Answer 2

Volume is related to liquidity -- but is not a predictor of the direction of a stock.

There is a relationship -- but it is not using absolute volume -- but relative volume. Look at volume compared to average volume.

An academic study in the late 1990s found that:

Higher than average volume stocks that have been doing well are likely to fall as investors sell off to take profits.

Lower than average volume stocks that have been doing poorly are likely to turn around and start doing well

lower than average volume stocks that ar doing well are likely to continue to do well.

Higher than average volume stocks that are doing poorly are likely to continue to do poorly.

Answer 3

I would buy a newspaper. look at the rediculously confusing stocks and all the seemingly pointless +'s and -'s and numbers.

there is a reason they are there. they tell you how the stock is trading (i.e. how much they are worth and if they are a solid choice or a big risk) then if you want to make money or not lose money i buy steady stocks like microsoft or one that doesnt fluctuate in value too much . i would buy these in high volume. if im trying to get rich quick i buy risky stock that might increase in value overnight and load up on those..

best idea... spread your money out. some steady stocks to retain value, some high risk stocks to gamble on, if they make $ cool, if they lose $ its not too much and im not broke, maybe get in on some mutual funds...

the idea is to make money.... like going to the casino.

its not too smart to put all your eggs in one basket.... so they say...

good luck

Answer 4

Not if everyone is selling. Check out charts, history, and company info. Tech may be a better investment that real estate.