A model of competitive stock trading is developed where investors differ in information and private investment opportunities, and trade rationally for informational and noninformational motives. The study examines how investor heterogeneity affects trading volume and its relation to price dynamics. It is found that trading volume is positively correlated with absolute price changes and dividends. Informational and noninformational trading lead to different dynamic relationships between volume and stock returns. The model considers a simple economy with traded assets (stock and risk-free bond) and private investment opportunities. Investors have different information about future dividends and private investment opportunities. Informed investors trade based on private information, while uninformed investors trade to rebalance portfolios. Trading volume is positively correlated with absolute price changes, and this correlation increases with information asymmetry. The model shows that public news about future dividends generates abnormal trading. Under asymmetric information, the stock price reflects both the true state of the economy and investors' expectations. The difference in responses to public information leads to trading. The greater the information asymmetry, the larger the abnormal trading volume when public news arrives. The model also captures two types of heterogeneity: investment opportunities and information. These lead to different dynamic relations between volume and returns. Without information asymmetry, trading is driven by portfolio rebalancing. With information asymmetry, uninformed investors may trade against informed investors' private information, leading to different dynamics in volume and returns. The model extends existing competitive models by incorporating dynamic trading strategies and both informational and noninformational trading. It shows that trading volume is positively correlated with absolute price changes and that this correlation increases with information asymmetry. The model also highlights the role of information asymmetry in affecting trading volume and stock returns.A model of competitive stock trading is developed where investors differ in information and private investment opportunities, and trade rationally for informational and noninformational motives. The study examines how investor heterogeneity affects trading volume and its relation to price dynamics. It is found that trading volume is positively correlated with absolute price changes and dividends. Informational and noninformational trading lead to different dynamic relationships between volume and stock returns. The model considers a simple economy with traded assets (stock and risk-free bond) and private investment opportunities. Investors have different information about future dividends and private investment opportunities. Informed investors trade based on private information, while uninformed investors trade to rebalance portfolios. Trading volume is positively correlated with absolute price changes, and this correlation increases with information asymmetry. The model shows that public news about future dividends generates abnormal trading. Under asymmetric information, the stock price reflects both the true state of the economy and investors' expectations. The difference in responses to public information leads to trading. The greater the information asymmetry, the larger the abnormal trading volume when public news arrives. The model also captures two types of heterogeneity: investment opportunities and information. These lead to different dynamic relations between volume and returns. Without information asymmetry, trading is driven by portfolio rebalancing. With information asymmetry, uninformed investors may trade against informed investors' private information, leading to different dynamics in volume and returns. The model extends existing competitive models by incorporating dynamic trading strategies and both informational and noninformational trading. It shows that trading volume is positively correlated with absolute price changes and that this correlation increases with information asymmetry. The model also highlights the role of information asymmetry in affecting trading volume and stock returns.