Complete Guide to Trade the Volatile Stocks Easily
It is believed that the stock future trading is not for everyone, gauging at the risk factors. There are several ways of investing in stock future market, but traders must estimate the amount of risk before stepping into this risk game. Being a future trader one must have entire knowledge of the market and understanding of the contracts. Before indulging into this trading, the traders must determine and evaluate the amount of time and research dedicated for it. If traders are not sure about the steps to take but are willing to trade in stock future market, they may take guidance from best advisory firm to get accurate stock future tips. While trading volatile stocks, you must always implement right trading strategy. The volatility helps the traders in implementing right trading strategies at right time. In case the technical analysts and traders want to implement option strategy then it is very important to know the volatility of the stock. In this post, you will get to learn three frequently used strategies that are discussed to measure the volatility of the stocks. One of the most prominent strategies is high minus low, which is used to evaluate profit margins for a security over the short- and long-term. Next Strategy that is usually used by the analysts to measure the volatility of the stocks is Average True Range. Average True Range indicator is almost similar to the high minus low indicator but it also take into the report of overnight gaps in its formula. ATR is known to calculate the average value over 14 days but the technical analysts use it for any time period according to their need for greater sensitivity. The ultimate goal of the ATR indicator is to find out the present and possible volatility of the stock from historical prices Third is Bollinger band Width. Bollinger bandwidth is derived from the Bollinger band indicators. The indicator implies a formula of subtracting the lower Bollinger band value from the higher Bollinger band value. In other words it calculates the percentage difference between the upper band and the lower band. Bandwidth is directly proportional to Bollinger bands. As the Bollinger bands gets narrow the bandwidth decreases and as the Bollinger bands widen up the bandwidth increases. The analysts use these strategies as they are easy to implement.