Use This to Your Advantage in Your Investment Strategy
Yesterday we began exploring the world of stock quotes.
Stock quotes are great because, when you have access to real-time stock quotes, there’s the chance you can boost your profits. On the flip side, not knowing how to read them can really hold you back.
We started looking at the different components of a stock quote:
Ticker symbol… dividend yield… dividend per share… etc.
I have a few more to cover with you today before talking about how you can use them as part of your investment strategy.
Let’s dive in.
The P/E ratio is complex, but I’ll boil it down to its basic parts. You get the P/E ratio by dividing the real-time price of a given stock by the stock’s earnings per share over the past year.
This is one of the most important parts of reading stock quotes. The trading volume tells you how many shares of a given stock have been traded during the day. It’s expressed in hundreds.
For instance, let’s say that stock XYZA has a trading volume of 7,500. This means that, during the day, 750,000 shares have traded hands in one way or another.
Day High and Low
Think of a stock quote’s day high and low as the maximum and minimum prices for a stock over a given day. It tells you the least among someone has paid per share as well as the highest amount.
The close price on a stock quote is the price the last person paid for shares in a given stock at the close of market. If the close price is 5% or greater than the previous day’s close rate, it will often appear in bold.
You might hear other investors talking about stock quotes in terms of being “up for the day” or “down for the day. This reflects the net change, which tells you the difference between the previous day’s close price and today’s price.
A positive net change means a stock is up for the day, while a negative net change means it’s down for the day.
Stock Quotes as Part of an Investment Strategy
Regardless of your trading style, if you’re an active trader, you need stock quote prices. All of this information can help you pick winners that others don’t spot and avoid losers that might seem at first glance to be potential winners.
What does that mean for you?
Practice reading stock quotes. Consider paper trading if you’re brand new to the stock market. Figure out how you can use the information provided to maximize your earnings potential.
The following are a few hints to keep in mind.
Use Stock Quotes as a Reference for Previous Price Movements
If you’ve been following my work, you know how much I love stock charts. They’re the bread and butter of my investment strategy.
You also know that I’m all about history repeating itself. Does it happen every time? Of course not. But when you can identify patterns that lead to legit supernovas, you have learned well, my friend.
Trade High-volume and Volatile Stocks
Volume and volatility might sound like bad omens, but they’re actually good things. High-volume stocks have lots of shares in play. That means you can exit and enter positions with ease, whether you’re going long or short.
Volatility tells you how much price action the stock is demonstrating. Low volatility means the price isn’t moving much. It looks like a horizontal line on a stock chart. What you want, when researching stock charts, is considerable price movement.
Master Your Skills
Learning how to read stock charts takes time. And effort. If you’re not willing to study and learn, you have no chance of capitalizing on the stock market.
I’ve mentioned before that most people who invest in the stock market lose money. I don’t want that to be you.
In fact, that’s why I became a teacher and mentor for other investors.
The Bottom Line
What’s a stock quote? It’s a representation of how a particular stock is performing right now and how it’s performed in the past. You can get tons of information from Level 2 stock quotes.
If you’re looking for a reliable source of real-time stock quotes, head over to StocksToTrade. It’s a magnificent trading platform that’s easy to understand and navigate. You’ll be researching like a stock market pro in no time.
Beyond that, I want you to pay careful attention to stock quotes and watch how they change day to day.
That’s why creating a watchlist is so important.
You want to track the stocks you think will spike or otherwise move in the direction you predict.
— Tim Sykes
Editor, Penny Stock Millionaires