Okay. So, why is actually trading volume so pointless during the initial screening? Let me just quickly show you an example.

So, this is a actually the Investagram’s screener screening tool. And, very luckily, they actually started providing for Singapore-listed stocks very, very recently. In fact, I think last weekend only. And that’s the reason why I have a chance to actually try it out. Before that it was really just on Phillippine stocks. So, I had a chance to take a spin on this screener, and I find some useful feature. And I’m going to use this to help explain to you why trading volume is actually quite pointless.

It is because I have actually done a screener based on the trading volume for at least the stock that has the highest trading volume in this very day itself, after the market close. Alright? So, as you can see over here, look at the number one most active stock in terms of trading volume. It has on that day, they have 100 million shares traded. Alright, so from the look of it, you might think that this stock is wow, this stock is a very, very liquid stock. But the fact is, it is not. And one of the easiest way to take a look is you just take a look at what is the price of the stock itself.

So, in this case, the price of this stock is actually 0.5 Singapore cents. So, it is really a very, very low price penny, super penny stocks. And, in fact, if you take a look at what is the actual trading valuer on that particular day, despite having 100 million shares being traded, is that the actual traded value for that day? There is only $500,000, okay?

So, for some of you listening in to this webinar right now, some of you may even have the capital to actually buy up the entire trading volume of this particular stock on that day itself, believe me or not. So, that is the reason why trading volume is really pointless when you do not actually consider what is the actual price of the stock on an instrument you are looking at at that point in time.

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Philip Teo

Founder & CEO at Traderwave Pte Ltd
Philip Teo is an entrepreneur, speaker and trading coach who specialises in the field of Technical Analysis of the financial markets. He is currently the Founder and CEO of Traderwave Pte Ltd, a financial technology company that offers a web charting application to global traders. He has conducted many trading seminars and appeared on national television before. He is also currently an official speaker and trainer with SGX Academy. Learn more about him at his Google+ Profile, LinkedIn Profile and Facebook Profile

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