What does the average true range tell you? The average true range (ATR) is a volatility indicator that gives you a sense of how much a stock's price could be expected to move. A day trader can use this in combination with other indicators and strategies to plan trade entry and exit po...
When it comes to day trading, trading high volume stocks is crucial. Volume refers to the number of shares traded in a particular stock within a given period. Higher volume stocks tend to have more liquidity, which means there are more buyers and sellers actively trading the stock. This liqu...
The rising velocity line shows that the trading instrument is growing at an ever-increasing speed. At the same time, positive acceleration values mean an increase in the velocity's growth rate. The same approach, applied in reverse, will help determine how fast the price of an asset is ...
Options traders prefer to trade volatility at extremes because volatility is historically mean-reverting. In terms of interpreting IV Rank, this metric is expressed as a value between 0 and 100%. For example, if implied volatility in hypothetical stock XYZ is trading at 50, and the 52-week ...
And in such cases, some investors and traders may view these discrepancies as trading/investing opportunities. For example, the P/E ratio for the S&P 500 is calculated by taking the average stock price of large-cap stocks in the S&P 500 Index and dividing that collective price by the mean ...
What I can say with certainty is don't put all your money into your trading account. It should be large enough to hurt if you lose your entire account, but not enough to lead you to financial ruin. The table above shows how much profit is needed to recover your losses during a drawdo...
In that case, you need to increase your time frame. As a general gauge of the profit potential, look at the ATR and the average length of price swings of the time frame.The liquidity of your trading market matters too. For instance, you want to trade stock options. But most stock ...
Wide-ranging days occur when the high and low prices of a stock are much further apart than they are on a typical day. Extreme wide-ranging days can help predict major trend reversals. The average true range (ATR) provides a way to compare the trading range between multiple days. ...
For the stock example, assume a stock is trading at $10 and has a $0.25 box size. If the price moves up to $10.25, a new brick will be drawn. That brick will only be drawn once the price closes at $10.25 or higher. If the price only reaches $10.24, a new brick will not be...
Waiting too long for additional profits could mean stock price movement, which can be bad for the position. We never route calendar spreads in volatility instruments. Each expiration acts as its own underlying, so our max loss is not defined. WHEN TO MANAGE Since this is a debit spread with...