Posted in Finance, Accounting and Economics Terms, Total Reads: 490
Definition: Active Stocks
Active Stocks are shares that are listed on an exchange that are traded heavily. Active stocks are constantly being bought and sold by active traders who hold such stocks for a short duration, typically a day, a few hours or just a few minutes.
Active traders differ from long term investors who pursue a buy-and-hold strategy and ignore the short term stock price movements. Active traders believe that they can profit from the short term price movements and adopt the following trading strategies:
• Day Trading: Stocks are bought and sold within the same day. Profits are made by leveraging the small price movements.
• Swing Trading: Traders take advantage of the price volatility that arises as a result of the establishment of new trends.
• Scalping: Traders profit from the various price gaps that are associated with bid/ask spreads, which is the difference between the highest price that a buyer will pay and the lowest price for which a seller will sell.
As active stocks are highly traded, the number of shares outstanding is large. Furthermore, heavy trading also means high liquidity. A list of stocks on an exchange that have high trading volumes over a given period is called most active list. Typically, shares are actively traded as a result of a large number of outstanding shares, as a result of a tender offer or due to unforeseen news about the stock, etc.
Below table shows a list of most active stocks trading on BSE S&P 100.