The Previous Day's Trading Range
by James
(Atlanta, GA)
Do you ever consider the previous day's trading range when making a decision on a position? You should!
I do..and have benefited numerous times. It does not matter which strategy I use - this is one of the last steps I do on my checklist.
It is a fairly simple task, but often provides many a successful trading opportunity
Here is what I do- I take the high for the previous day and subtract it from low for that day. If the range is more than $2, I definitely "short-list" this this stock for trading.
I have also used it to determine my entry position - but again thats another story...
Here is the basic rationale - stocks that have a larger trading range present a better opportunity for larger moves to benefit from, than stocks that fluctuate by a few cents each day.
One last note on this - It is easier to use an excel spreadsheet for this task. I have created one if anyone is interested.
www.beginners-stock-investing-guide.com