Active and Most Active Stocks, Definition and Uses
Active stocks and Most Active Stocks are common trading terms you’ll hear and read frequently in financial media. Below you can learn more about the definition uses and what the difference is between the two terms.
On financial websites you’ll see categories such as “Active Stocks” and “Most Active Stocks” showing the stock screeners of stocks that have achieved highest volume over a given period. While some stocks may appear in both categories, there are some difference.
Active Stocks Definition
If a stock is said to be active it means that stocks does ample volume. Volume changes over time, as companies/stocks move in and out of favor. When the price is moving a lot that also tends to attract more volume.
There are many stocks that are always active though; they tend to trade millions of shares a day whether the price moves a lot or not. The SPDR S&P 500 (SPY) is an example of an ETF that is always actively traded; at the start of 2016 average volume per day is 118 million shares. General Electric (GE), Bank of America (BAC) and Apple (AAPL) are examples of other stocks that see steadily high volume day after day, and are therefore considered active stocks.
As of 2016, there are about 100 stocks and ETFs (on average) that trade more than 10 million shares per day on average. About 260 stocks in the US trade more than 5 million shares per day on average. These number will fluctuate when the market sees very high interest or very low interest. Volume of 5 million shares or more per day equates to an active stock; some may even set the bar lower though, saying 2 million shares, or 1 million shares a day is an active stock. There is no specific number that makes a stock active—as long as you can buy and sell a stock at will, the stock is active.
Active can also refer to price movement. Therefore, on some financial sites you may see “Active Stocks” referring to stocks that are having sizable price moves (usually ranked by %) today.
Most financial resources/sites distinguish market data on volume from an active stock based on price movement.
Most Active Stocks Definition
Most Active Stocks have a more stringent definition. These are the stocks that are most heavily traded (by volume) on a particular day. Certain stocks and ETFs are almost always on this list, such as the SPDR S&P 500 mentioned prior. Although from day to day the list changes because some stocks have news which attracts volume and bumps them onto the most active list.
The list is usually restricted to the top 10 or 20 stocks, as this gives traders a snapshot of what people are buying and selling the most today. The list may also be broken down by exchange, such as the Most Active NYSE Stocks, or Most Active Nasdaq Stocks.
Most active may also refer to the most active stocks in terms of price movement. Usually this is specified by a distinct title, such as Largest Decliners or Largest Advancers.
Active and Most Active aren’t terms reserved solely for stocks. Futures, bond, ETF and currency markets all have active and most active products.
Active and Most Active Stocks: Uses
Lists of active stocks and most active stocks are published because traders want to see what stocks other traders are trading. The lists provide a catalog of potential stocks where there could be opportunity.
Day traders are especially attracted to stocks that have large price movement and large volume–Most Active and Biggest Advancers/Decliners.
Investors may not care about the day to day price movements of a stock, but may choose to only invest in stocks that are active, as this helps assure they can enter and exit trades with ease when it is time to do so. If a stock does little volume, it means few people are buying or selling it. That means pricing is less competitive and it may take longer to enter or a exit trade in such an environment. Why? Because you need to wait for a buyer/seller to transact with you. In an active stock, there is always someone to buy/sell from/to.
Yahoo! Finance provides a list of Most Active stocks, which can broken down by exchange.
Nasdaq provides Actives lists such as: Most Advantages, Most Declined, Most Active by Share Volume, Most Active by Dollar Volume.
On NYSE, sort all stocks (or ETFs) by daily volume to see the most active stocks today.
TMX Money provides Market Movers by Volume on its homepage, highlighting the most active Canadian stocks.