Investors around the world are searching for the most active stocks today. Many observing this behavior may be asking “why is this the case?” One major reason is because activity is a technical indicator of the volume of trades that occur in any given market.

The more active a stock becomes, the more likely the share price might move. Now that move could be up or it could be down. But the very fact that the stock is active is a direct reflection that something news worthy has taken place.

The Most Active Stocks Today – Supply and Demand

You see, by looking for the most active stocks today, you can find stocks that are trending. This activity is based on supply and demand. As interest in any given stock changes, so does the supply and demand. Millions of eager investors world-wide look to get in on forming trend as early adopters. As with any trend, the early adopters not only get a better share price, but they also have greater influence on all of the investors that come behind them. This can often lead to artificial value.

Here is an example: Jim is at his local grocery store shopping. Jim notices another customer buying a large amount of strawberries. Now, Jim didn’t come to the store to buy strawberries. But the very fact that another customer is buying large amounts of strawberries might make Jim think something is better about those strawberries. This is where higher demand might come in…

Little does Jim know, there are 10x more strawberries waiting in the back of the store, ready to come out. But that doesn’t matter. Because the behavior of other buyer has elevated the perceived value of the strawberries in Jim’s mind. The same thing happens with the stock market. Keep this illustration in mind when researching the most active stocks today or any day for that matter.

The Trend Is Your Friend

Monitoring the activity of stocks is a largely reactive process. If you’ve ever invested for any period of time, you’ve likely heard the phrase “the trend is your friend.” This accents the idea that trends tend to last long enough for investors to take advantage of gains or losses (if you’re shorting), even after the stock has started to rise or fall for a given period of time.

If you notice there is a rise in volume for one of your favorite tech stocks, you might miss the initial boost in share price. But if you can get in early enough, the trend may continue for you to capitalize on further gains. In addition to this initial boost in buying demand, investors should closely monitor company financials. Revenue and future business prospects are also key metrics to consider before investing based on activity.

In fact, some of the most active stocks can become riskier as the share price could rise and fall before investors can cash out their gains. Momentum and market confidence can be good indicators when searching for the most active stocks today.

As new innovation and trends continue to shape our country and world, investors should take note. In addition to earnings reports and the news cycle, there are a few other key factors to consider. New product development often drives activity, as the anticipation of increased sales elevates interest. Also take note of unfortunate occurrences. For example, utility and insurance stocks will drop off if there is a natural disaster or severe storm.

Recognizing all of these factors will allow you to make more informed decisions, while monitoring the most active and trending stocks.

More On The Most Active Stocks Today

As always, the crew here at Investment U aims to deliver the most valuable stock research directly into your inbox. We do this through a variety of newsletters. If you’re interested in the most timely trending stocks, consider signing up for our Profit Trends newsletter below. By spotting these trends early on, investors are given a much better opportunity for high returns, before the rest of the crowd comes in.