Dollar Volume Liquidity

By 
CORY MITCHELL
 

Updated September 03, 2021

Fact checked by 

AMANDA JACKSON
What Is Dollar Volume Liquidity?
Dollar volume liquidity refers to a stock's or exchange-traded fund's (ETF)
share price times its daily volume. Dollar volume liquidity is important to
institutional investors because they make such large trades.
When a stock is highly liquid, it is easier to enter and exit positions while
having less impact on the stock's price.
KEY TAKEAWAYS
 Dollar volume liquidity is a stock's share price multiplied by its daily
share volume.
 High dollar liquidity makes it easier for institutional traders to buy or sell
in large dollar amounts without moving the price substantially.
 High dollar volume tends to decrease the bid-ask spread, but this also
depends on share volume, since high volume has a greater impact on
the spread.