How do stock move from one price level to another price level is one of the most important understanding a stock trader needs to have to make money in the market.
Every successful trader has either a explicit understanding of this or an implicit understanding of this. Edges are built around this kind of understanding.
How do stock move question has different answer based on whom you ask. A trader who primarily trades a breakout will say stock move from one level to another in series of moves . As against that a mean reversion trader will say stock bounce back sharply from sell offs.
The question has multi layered answer depending on time frame you trade and frequency with which you trade. Active traders are more interested in how a stock moves on few minutes , hours or days while position traders are more interested in multi month or year moves.
Different stocks move in a different way. Growth stock moves have certain distinct characteristics and once you figure that out you can build a trading strategy to exploit that understanding. Turnaround stocks move very differently from growth stocks and the magnitude of moves are different based on level of distress accompanying turnaround. Highly distressed turnaround stocks can have ferocious move of few hundred percent as soon as turnaround becomes apparent. Cyclical stocks move differently and knowing how they move can help you avoid buying them at wrong time.
One of the beauty about the stock market is different participants can focus on different part of the stock move and be profitable.
If you are struggling with your trading your first starting point should be to study how stocks move on timeframe you want to trade.
Every successful trader has either a explicit understanding of this or an implicit understanding of this. Edges are built around this kind of understanding.
How do stock move question has different answer based on whom you ask. A trader who primarily trades a breakout will say stock move from one level to another in series of moves . As against that a mean reversion trader will say stock bounce back sharply from sell offs.
The question has multi layered answer depending on time frame you trade and frequency with which you trade. Active traders are more interested in how a stock moves on few minutes , hours or days while position traders are more interested in multi month or year moves.
Different stocks move in a different way. Growth stock moves have certain distinct characteristics and once you figure that out you can build a trading strategy to exploit that understanding. Turnaround stocks move very differently from growth stocks and the magnitude of moves are different based on level of distress accompanying turnaround. Highly distressed turnaround stocks can have ferocious move of few hundred percent as soon as turnaround becomes apparent. Cyclical stocks move differently and knowing how they move can help you avoid buying them at wrong time.
One of the beauty about the stock market is different participants can focus on different part of the stock move and be profitable.
If you are struggling with your trading your first starting point should be to study how stocks move on timeframe you want to trade.
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