What does volume and huge daily price increases say about stock prices?
Stock B could be considered to be more risky because it seems to be more volatile - sharp rises on large volume increases can easily be followed by sharp drops or by further rises in the start of a new uptrend.  However, if both A and B are trading on low volume in general, they can both be more on the risky side due to having relatively low liquidity, especially if you buy a large order compared to the average daily volume. But just looking at the criteria you have included in your question is not enough to determine which stock is riskier than the other, and you should look at this criteria in combination with other indicators and information about each stock to obtain a more complete picture.
What if there is only one trading day and the volume is smaller than   the open interest on that one trading day. This is assuming there is   no open interest before that day? I pulled this from a comment. This can't happen. We have zero open interest on day one. On day 2, I buy 10 contracts. Volume is 10 and now open interest is also 10. Tomorrow, if I don't sell, open interest starts at 10 and will rise by whatever new contracts are traded.   This is an example. I removed the stock name. This happens to be the Jan'17 expiration. The 10 contract traded on the $3 strike happen to be mine. You can see how open interest is cumulative, representing all outstanding contracts. It's obvious to me the shares traded as high as $5 at some point which created the interest (i.e. the desire) to trade this strike. Most activity tends to occur near the current price. "I've alway thought that it was strange, but the ""price"" that gets quoted on a stock exchange is just the price of the last transaction. The irony of this definition of price is that there may not actually be any more shares available on the market at that price. It's also strange to me that the price isn't adjusted at all for the size of the transaction. A transaction of just 1 share will post a new price even if just seconds earlier 100,000 shares traded for a different price. (Ok, unrealistic example, but you get my point.) I've always believed this is an odd way to describe the price. Anyway, my diatribe here is supposed to illustrate the point that the fluctuations you see in price don't really reflect changing valuations by the stock-owning public. Each post in the exchange maintains a book of orders, with unmatched buy orders on one side and unmatched sell orders on the other side. If you go to your broker and tell him, ""fill my order for 50,000 shares at market price"", then the broker won't fill you 50,000 shares at .20. Instead, he'll buy the 50 @ .22, then 80 @ .23, then 100 @ .30, etc. Because your order is so large compared to the unmatched orders, your market order will get matched a bunch of the unmatched orders on the sell side, and each match will notch the posted price up a bit. If instead you asked the broker, ""open a limit order to buy 50000 shares at .20"", then the exchange will add your order to the book: In this case, your order likely won't get filled at all, since nobody at the moment wants to sell at .20 and historically speaking it's unlikely that such a seller will suddenly appear. Filling large orders is actually a common problem for institutional investors: http://www.businessweek.com/magazine/content/05_16/b3929113_mz020.htm http://www.cis.upenn.edu/~mkearns/papers/vwap.pdf (Written by a professor I had in school!)" "Just read the book Flash Boys by Michael Lewis.  It describes this process in detail, albeit a bit more dramatically than it has to.  Basically what ""HFTs"" (high frequency traders) do is they set up their line to the exchange so its microseconds faster than everyone else.  Then they test out the market with tiny orders, seeing how fast it's getting filled - if these are getting filled immediately, it probably means there's a big order coming in from an investor.  So the algorithm - and it's all algo-based obviously because no human can remotely hope to catch this - will detect that as soon as there's a spike in volume, it will buy all of the volume at the current price, and sell it back for higher, forcing the big investor to take on higher prices.    Another case is that some HFTs can basically buy the entire trade book from an exchange like Nasdaq.  So every time someone places a market order for 200 shares of a 6.5 stock, the HFT will see it, buy up all the current stock from say 6.5-6.6 and sell it back at 6.7.  Not rocket science if you already get info about the trade coming in, in fact this is basically market making but performed by an ""evil HFT"" instead of a ""trustworthy bank.""    But honestly there are a lot more ways to make money from HFT than front-running, which isn't even possible anymore because exchanges no longer sell their books to HFTs." That is mostly true, in most situations when there are more buy orders than sell orders (higher buy volume orders than sell volume orders), the price will generally move upwards and vice versa, when there are more sell orders than buy orders (higher sell volume orders than buy volume orders), the price will generally move downwards. Note that this does not always happen, but usually it does. You are also correct that for a trade to take place a buyer has to be matched with a seller (or the buy volume matched with the sell volume). But not all orders get executed as trades. Say there are 50 buy orders in the order book with a total volume of 100,000 shares and the highest buy order is currently at $10.00. On the other side there are only 10 sell orders in the order book with total volume of 10,000 shares and the lowest sell order is currently $10.05. At the moment there won't be a trade unless a new buyer or seller enters the market to match the opposing side, or an existing order gets amended upper or lower to match the opposing side. With more demand than supply in the order books what will be the most likely direction that this stock moves in? Most likely the price will move upwards. If a new buyer sees the price moving higher and then looks at the market depth, they would most likely place an order closer to the lowest sell order than the current highest buy order, say $10.01, to be first in line in case a market sell order is placed on the market. As new buy orders enter the market it drives the price higher and higher until the buy orders dry up. Yes, that's what it means. Also, it tells you that the share price went up by $0.39 yesterday, which was an increase of 1.43% from the previous day's price, and that the total value of all of Microsoft's shares is $232.18 billion (from which we can deduce that there are a bit less than 10 billion Microsoft shares in total). This happens on dark pools quite often. If I am a large institutional investor with tens of millions of shares, I may want to unload slowly and limit the adverse affects on the price of the stock. Dark pools offer anonymity and have buyers / sellers that can handle large volume.  In the case of a day trader, they often trade stocks with light volume (since they have large fluctuations that can be quite profitable throughout the session). At the end of the session, many traders are unwilling to hold positions on margin and want to unload fast. "Probably the biggest driver of the increased volumes that day was a change in sentiment towards the healthcare sector as a whole that caused many healthcare companies to experience higher volumes ( https://www.bloomberg.com/press-releases/2017-07-11/asset-acquisitions-accelerate-in-healthcare-sector-boosting-potential-revenue-growth ). Following any spike, not just sentiment related spikes, the market tends to bounce back to about where it had been previously as analysts at the investment banks start to see the stock(s) as being overbought or oversold. This is because the effect of a spike on underlying ratios such as the Sharpe ratio or the PE ratio makes the stock look less attractive to buyers and more attractive to sellers, including short sellers. Note, however, that the price is broadly still a little higher than it was before the spike as a result of this change in sentiment. Looking at the price trends on Bloomberg (https://www.bloomberg.com/quote/CDNA:US) the price had been steadily falling for the year prior to the spike but was levelling out at just over $1 in the few months immediately prior to the spike. The increased interest in the sector and the stock likely added to a general change in the direction of the price trend and caused traders (as opposed to investors) to believe that there was a change in the price trend. This will have lead to them trading the stock more heavily intraday exacerbating the spike. Note that there traders will include HFT bots as well as human traders. You question the legality of this volume increase but the simple answer is that we may never know if it was the target of traders manipulating the price or a case of insider trading. What we can see is that (taking ""animal spirits"" into account) without any evidence of illegality there are plenty of potential reasons why the spike may have occurred. Spikes are common where traders perceive a change in a trend as they rush to cash in on the change before other traders can and then sell out quickly when they realise that the price is fundamentally out of sync with the firm's underlying position. You yourself say that you have been watching the stock for some time and, by that fact alone, it is likely that others are for the same reasons that you are. Otherwise you wouldn't be looking at it. Where people are looking at a stock expecting it to take off or drop you expect volatility and volatility means spikes!" Nobody tracks a single company's net assets on a daily basis, and stock prices are almost never derived directly from their assets (otherwise there would be no concept of 'growth stocks').  Stocks trade on the presumed current value of future positive cash flow, not on the value of their assets alone. Funds are totally different.  They own nothing but stocks and are valued on the basis on the value of those stocks.  (Commodity funds and closed funds muddy the picture somewhat, but basically a fund's only business is owning very liquid assets, not using their assets to produce wealth the way companies do.) A fund has no meaning other than the direct value of its assets.   Even companies which own and exploit large assets, like resource companies, are far more complicated than funds: e.g. gold mining or oil extracting companies derive most of their value from their physical holdings, but those holdings value depends on the moving price and assumed future price of the commodity and also on the operations (efficiency of extraction etc.) Still different from a fund which only owns very liquid assets. You may simply be asking why stocks 'gap up' or 'gap down' when the stock market opens. This is because the price adjusts to news that occurred while the exchanges were closed overnight. Perhaps Asian stocks crashed, or perhaps a news story was released in the New York Times about some major company. There are thousands of factors that affect market sentiment, and the big gaps that happen at the open of every trading day is the price of the stocks catching up to those factors. I would say the most challenging fact for this assertion is that HFT firms operate with extremely limited capital bases. For a stock with say 10m shares ADV, even a very large and successful HFT strategy might use a position limit of no more than 5000 shares.  That is to say if you sum up and net the buys and sells for a stock across the day the HFT firm will never exceed 10,000 shares (2x position limits assuming it completely flipped) on a stock that trades 10,000,000 shares on a given day. The high volumes are attained through high turnover, the strategy might trade up to 500,000 shares (or 5% of the volume) attaining a 50x turnover.  But that brings me back to the original point. In the market microstructure literature market impact generally has been found to scale linearly or even sub-linearly for net volume executed.   If I alternate between thousands of 1 lot buy and sell orders, it would be very difficult for me to move the market because the market impact of every one of my buy orders roughly cancels the market impact of my almost exactly equal number of sell orders.   There might be a higher-order mechanism at work, but I'm genuinely curious what you think it might be. How could strategies that attain such small net positions have such out-sized impact on market direction? Obviously there are good answers about the alternatives to the stock market in the referenced question.  HFT has been debated heavily over the past couple of years, and the Flash crash of May 6, 2010, has spurred regulators to rein in heavy automated trading. HFT takes advantage of churn and split second reactions to changing market trends, news and rumors. It is not wise for individual investors to fight the big boys in these games and you will likely lose money in day trading as a result. HFT's defender's may be right when they claim that it makes the market more liquid for you to get the listed price for a security, but the article points out that their actions more closely resemble the currently illegal practice of front-running than a negotiated trade where both parties feel that they've received a fair value. There are many factors including supply and demand which affect stock prices more than volume does. While market makers are generating the majority of volume with their HFT practices, volume is merely the number of shares bought and sold in a day. Volume shows how many shares people are interested in trading, not the actual underlying value of the security and its long term prospects. Extra volume doesn't affect most long term investments, so your long term investments aren't in any extra danger due to HFT. That said, the stock market is a risky place  whether panicked people or poorly written programs are trading out of control. Most people are better off investing rather than merely trading. Long term investors don't need to get the absolute lowest price or the highest sell. They move into and out of positions based on overall value and long term prospects. They're diversified so bad apples like Enron, etc. won't destroy their portfolio. Investors long term view allows them to ignore the effects of churn, while working like the tortoise to win the race while the hare eventually gets swallowed by a bad bet. There are a lot of worrying and stressful uncertainties in the global economy. If it's a question of wisdom, focus on sound investments and work politically (as a citizen and shareholder) to fix problems you see in the system. Stocks in the Weimar hyperinflation are discussed in When Money Dies. I don't own a copy of the book but here is a link to a blog post about it. Speculation on the stock exchange has spread to all ranks of the   population and shares rise like air balloons to limitless heights Basically, the stock market did very well (i.e. the US dollar value of stocks increased quite a lot. Of course, the price of everything increased if measured in marks.) Quote from the article: Bottom line: In marks, stocks had an amazing run. Even in USD they had   a nice runup. It makes sense that the stock market would skyrocket because (a) if  money has no value, then people will want to replace money with tangible things like goods, and since a stock represents a share in the factories and things which a company owns, it makes sense that you would want them and (b) if money has no value anyway, why not gamble with it? I would be interested to hear what happened in other hyperinflations. "Buying pressure is when there are more buy orders than sell orders outstanding.  Just because someone wants to buy a stock doesn't mean there's a seller ready to fill that order.  When there's buying pressure, stock prices rise.  When there's selling pressure, stock prices fall. There can be high volume where buying and selling are roughly equal, in which case share prices wouldn't move much. The market makers who actually fill buy and sell orders for stock will raise share prices in the face of buying pressure and lower them in the face of selling pressure.  That's because they get to keep the margin between what they bought shares from a seller for and what they can sell them to a new buyer for.  Here's an explanation from InvestorPlace.com about ""buying pressure"": Buying pressure can basically be defined as increasingly higher demand for a particular stock's shares. This demand for shares exceeds the supply and causes the price to rise. ... The strength or weakness of a stock determines how much buying or selling interest will be required to break support and resistance areas. I hope this helps!" Consider the price history to be the sum of short term movements and long term movements. If you hold a stock for a long time you will benefit (or lose) from its long term movement.  If a sufficiently large and very good short term trader existed he would tend to reduce short term volatility, eventually to nearly zero. At that point, the price would rise gently over the course of the day in line with the long term variation in price. Presumably robot traders will increase the time horizon of their trades when they have exhausted the gains they can make from short term trades. Often times the commission fees add up a lot. Many times the mundane fluctuations in the stock market on a day to day basis are just white noise, whereas long term investing generally lets you appreciate value based on the market reactions to actual earnings of the company or basket of companies. Day trading often involves leverage as well.