Saturday 7 May 2016

Introduction : 52-Week High Low

This piece of information can be easily found from our local newspaper under the stock section together with daily stock quotes.

To understand further, I did some research and found the following information from www.investopedia.com website.

"The highest and lowest prices that a stock has traded at during the previous year.

Many traders and investors view the 52-week high or low as an important factor in determining a stock's current value and predicting future price movement.

As a stock trades within its 52-week price range (the range that exists between the 52-week low and the 52-week high), investors may show increased interest as price nears either the high or the low.

A popular strategy used by stock traders is to buy when price exceeds its 52-week high, or to sell when price falls below its 52-week low.

The rationale behind this strategy is that if price breaks out from the 52-week range (either above or below) there will be enough momentum to continue the price move in a favorable direction.

Alternatively, another strategy is to sell when price reaches its 52-week high on the assumption that price will recede, or to buy when price reaches its 52-week low in anticipation of a value play.

Traders and investors typically conduct additional technical and/or fundamental analysis for confirmation. "


Quite an interesting strategy so I decided to test it out on my metastock software and name it as "S-Trader 52-week High Low".
 

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