To find the most active stocks on the Toronto Stock Exchange for a given month, visit websites such as Barchart.com, MarketWatch.com and StockCharts.com and select the appropriate filters. Information on stock trading activity can help investors infer market sentiment, gauge liquidity and predict the stickiness of price movements, states Investopedia.
Trading activity can help investors predict the strength of stock price rallies, explains Investopedia. For instance, if the price of a stock starts rising as its trading volume increases, the price uptick is likely to persist and grow. Conversely, the rally is unlikely to continue if the increase is accompanied by low trading activity.
Trading volumes can also help investors infer the direction of future price movements, according to Investopedia. For instance, increased trading activity that foreshadows important corporate announcements could lead to sustained price rallies. Trade activity data is available at many financial websites, trade publications and newspapers.
Trade activity can heighten during earnings seasons, when many corporations report their earnings, notes Investopedia. If the results surpass investor expectations, the stock of the reporting company rallies. However, if the earnings figures disappoint, the price of the stock drops. However, because the primary driver of prices is investor sentiment, stocks can still rally even when the company in question reports no profit, as was the case during the dotcom bubble of the late 1990s.