One way to reduce volatility in your portfolio is to focus on stocks that have an average daily dollar volume of at least $20 million.
In this post I’ll show you how to calculate the average daily dollar volume and how to sort lists in MarketSmith based on the 50-day average daily dollar volume.
There is nothing magical about $20 million. What’s important to take away is that stocks with a lower average daily dollar volumes may have more volatility and are typically thinly traded.
How you choose to determine what is a good baseline, depends on your investing style and risk tolerance.Continue reading