The number of shares traded in a single day can be greater than the number of a company's outstanding shares, but this is relatively rare. This high trading volume tends to occur during important company events and is more common with companies that have a relatively small float.

Float refers to the company's shares that are available to be freely bought and sold by the public without restrictions. The value of the float can change for several reasons. For example, a company may decide to 澳洲幸运5官方开奖结果体彩网:repurchase its own shares from the market, which would then reduce the number of shares available for purchase by the public. Alternatively, a company may decide to sell 澳洲幸运5官方开奖结果体彩网:authorized shares from its treasury to the public.

High 澳洲幸运5官方开奖结果体彩网:trading volume is usually marked by a large price movement. This essentially means that there is so much buying and selling of shares that a lot of the shares are changing hands in a single day. This does not, however, mean that every 澳洲幸运5官方开奖结果体彩网:shareholder is selling shares while new holders are taking that shareholder's place. In most cases, the high trading volume is due to some factor or 澳洲幸运5官方开奖结果体彩网:trading catalyst that propels the price of the security up or downꦺ.

How Day Traders Impact Trading Volume

Companies receive a large amount of market focus and stock activity during important events. Examples of these events include 澳洲幸运5官方开奖结果体彩网:initial public offerings (IPOs), takeover bids, and the announcement of corporate earnings. These events bring the company to the focus of traders—regular traders and 澳洲幸运5官方开奖结果体彩网:day traders—and increase trading volume. The day traders are trying to make a quick buck on the stock's movement by entering and exiting positions with the i𝕴ntention of only holding the shares for a few hours or even minutes.

Longer-term traders, on the other hand, are buying or selling off of the news, which also contributes to the increased stock activity. The day traders or short-term investors provide the 澳洲幸运5官方开奖结果体彩网:liquidity requir𓃲ed to trade more shares than the actual shares outstanding. In other words, while a lot of investors who held the shares before an event will not trade on this particular day, it is the day traders and short-termers that trade the shares many times during a trading session.

How Tradin🌌g🌳 Volume and Shares Outstanding Interact

Let's assume that the number of shares outstanding in a pharmaceutical company is 10 million. Before the market opens, the company announces that its new drug has been approved by the 澳洲幸运5官方开奖结果体彩网:Food and Drug Administration (FDA) to be sold on the market—a huꦿge breakthrough.

Imagine that half of the shareholders do not sell their positions based on the news and continue to hold them. However, since the stock price jumped on the positive news, five million shares are sold throughout the trading session by investors who wanted to 澳洲幸运5官方开奖结果体彩网:lock in gains. And there will be buyers, with different views and aims, ☂who will buy those💖 shares.

All this activity boosts trading volume. If, say, each of the five million shares is each traded 10 times in a day, this would be recorded as a trading volume of 50 million shares, which is five tim☂es more than the number of o꧒utstanding shares.

This can happen when a lot of new investors—b𒉰oth long and short term—enter the market. So, while not all shares are being actively traded, a fair portion are, and it is these that are being bought and sold multiple times, resulting in more shares traded, or changing hands, than there are shares outstanding.

The Bottom Line

Outstanding shares are the number of shares a company has in the market, while trading volume measures how often those shares change hands during a specified period. In most cases, volume is only a fraction of the number of outstanding shares, but in periods of speculation and intensified trading, the volume may actually exceed the number of shares outstanding.