Indian Journal of Finance

Open Access Open Access  Restricted Access Subscription Access

Analysis of Asymmetry in the Price-Volume Relation: Evidence from the Pakistani Stock Market


Affiliations
1 Lecturer, National University of Modern Languages, Islamabad, Pakistan
2 Senior Research Economist, Pakistan Institute of Development Economics, Islamabad, Pakistan

   Subscribe/Renew Journal


Market participants keep a close eye on trading volume as it reflects the dynamic interplay between informed traders and uninformed traders who interact with each other and set market clearing prices. Volume represents the total number of shares traded for a given time period and measures the liquidity in a stock or index. The higher the volume, the narrower are the spreads, less slippage, and less volatility. Trading volume is viewed by traders as the critical piece of information that signals the price movements. Stock prices are usually influenced by positive trading volume through the available set of relevant information on the market. A revision in investors' expectations usually leads to an increase in trading volume, which eventually reflects the sum of investors' reaction to news. Trading volume either activates or deactivates the price movements.
User
Subscription Login to verify subscription
Notifications
Font Size

Abstract Views: 183

PDF Views: 0




  • Analysis of Asymmetry in the Price-Volume Relation: Evidence from the Pakistani Stock Market

Abstract Views: 183  |  PDF Views: 0

Authors

Fauzia Mubarik
Lecturer, National University of Modern Languages, Islamabad, Pakistan
Attiya Y. Javid
Senior Research Economist, Pakistan Institute of Development Economics, Islamabad, Pakistan

Abstract


Market participants keep a close eye on trading volume as it reflects the dynamic interplay between informed traders and uninformed traders who interact with each other and set market clearing prices. Volume represents the total number of shares traded for a given time period and measures the liquidity in a stock or index. The higher the volume, the narrower are the spreads, less slippage, and less volatility. Trading volume is viewed by traders as the critical piece of information that signals the price movements. Stock prices are usually influenced by positive trading volume through the available set of relevant information on the market. A revision in investors' expectations usually leads to an increase in trading volume, which eventually reflects the sum of investors' reaction to news. Trading volume either activates or deactivates the price movements.