When you’re eyeing a stock on the ASX, do you check how many shares change hands each day? That’s not just a number for traders—Average Daily Trading Volume (ADTV) is a crucial signal for anyone looking to invest smart in 2025. Here’s how ADTV shapes the markets, why it matters more than ever, and what trends Aussie investors should watch right now.
What is Average Daily Trading Volume (ADTV)?
At its core, ADTV is a simple measure: it’s the average number of shares or contracts traded each day over a specified period (often 20 or 30 days). For example, if a company’s shares are traded 100,000 times per day on average, that’s its ADTV. But beneath this simplicity lies a world of insight:
- Liquidity Indicator: A higher ADTV means more buyers and sellers, making it easier to enter or exit a position without causing wild price swings.
- Market Sentiment: Surges or drops in ADTV can signal changing investor appetite or impending news.
- Trading Costs: Thinly traded stocks with low ADTV often have wider bid-ask spreads, raising costs for investors.
In 2025, with the ASX experiencing a wave of new listings and increased retail participation, understanding ADTV is more important than ever.
ADTV and Liquidity: What It Means for Your Trades
Liquidity is the lifeblood of any market, and ADTV is one of its most revealing metrics. Here’s why:
- Easy Entry and Exit: Stocks with a high ADTV—think BHP Group or Commonwealth Bank—allow investors to buy or sell large volumes without moving the price dramatically.
- Reduced Slippage: With more trades happening, the difference between the price you expect and the price you get (slippage) shrinks. This is critical for anyone trading in size or using stop-loss orders.
- Lower Spreads: Competitive trading tightens the bid-ask spread, which can save you money on every trade.
Conversely, stocks with low ADTV can see prices jump or tumble on relatively small trades. For example, in early 2025, several ASX-listed tech microcaps with daily volumes under 10,000 shares saw wild 10%+ swings on days when a single institutional investor bought or sold a block.
Recent 2025 Trends: What’s Driving ADTV on the ASX?
This year, several trends are reshaping how ADTV is viewed and used by Australian investors:
- ETF Boom: As exchange-traded funds (ETFs) dominate inflows, many now boast daily volumes rivaling blue-chip shares. BetaShares and Vanguard’s top ETFs regularly see ADTVs in the millions, making them a go-to for liquid, diversified exposure.
- Retail Trading Surge: ASX data in Q1 2025 shows retail investors account for 28% of total trades, up from 23% in 2022. This has boosted ADTV in popular sectors like green energy and lithium mining.
- Algorithmic Trading: The rise of algorithmic and high-frequency trading has compressed spreads but also amplified ADTV in top-200 stocks, making them even more liquid but sometimes more volatile intraday.
- Regulatory Changes: ASIC’s 2025 review of market integrity rules has put a spotlight on ‘pump-and-dump’ schemes often associated with thinly traded penny stocks, pushing more investors to focus on shares with higher, healthier ADTV.
For example, lithium producer Pilbara Minerals (PLS) regularly sees ADTV above 20 million shares, reflecting both institutional and retail interest. Meanwhile, some speculative tech names still languish with ADTVs under 5,000, despite social media buzz.
How to Use ADTV in Your Investing Strategy
Whether you’re a long-term investor or an active trader, ADTV can help you:
- Screen Stocks: Filter out illiquid shares to avoid being trapped in positions you can’t exit quickly.
- Spot Opportunities: Sudden spikes in ADTV may precede major announcements, earning calls, or regulatory changes.
- Set Realistic Order Sizes: Match your trade size to a stock’s ADTV to avoid moving the market or getting stuck with partial fills.
- Gauge Market Health: Sector-wide ADTV changes can reveal shifting investor sentiment—for example, increased trading in renewables during a government policy announcement.
Many online brokers and trading platforms in Australia now provide real-time ADTV data, making it easier to incorporate into your decision-making process.
Conclusion: ADTV is Your Trading Compass in 2025
Average Daily Trading Volume isn’t just a technical footnote—it’s a window into market health, liquidity, and sentiment. As the ASX evolves with new rules, more retail participants, and the ongoing ETF boom, keeping an eye on ADTV can help you avoid costly pitfalls and spot your next opportunity. Make it a habit to check ADTV before every trade, and you’ll be trading smarter in 2025 and beyond.
