When you start trading it can be very overwhelming. Trading has evolved into a community with their own way of communicating. We have already covered Bullish and Bearish, which has been one of the highest rated posts YTD. However, that is just the tip of the investing iceberg – how about LOD & HOD?
Starting with LOD, or “Low of the day”, which is a key point in any chart analysis procedure. Depending where the lowest point hits, you can develop a strong trading strategy. Ideally, the LOD will be at the start of the trading day. This indicates that the stock has improved in price gradually since it was first available.
Taking a quick look at the SWIYT app we can see top stocks today for some actual examples:
Looking at the low of the day (LOD) on this chart, you can see that the lowest point of the chart was early in the morning. With a 400% move, this was a fortune maker for an endless amount of traders today. I’m a huge advocate of not only reviewing several charts throughout the day, but also reflecting on the best performers. Its important to review trends on the market and see how charts are performing. The fact that this held it’s gains throughout the day is a great indicator that similar stocks will do the same. Remember, you are buying and selling pieces of a company from other people. You are really trading on the emotions of others – which is unpredictable and can seem illogical. With recent events like COVID-19, the trend has been short holds for investors, which usually results in a stock losing most of its gains by the end of the day (EOD).
LOD should always be at the start of the day for Bullish trading.
It’s also important to realize that percent gains reflect the price open, not the LOD. Meaning, when the stock market opens the percent gained/loss is recorded at that benchmark. Many times the difference between LOD and HOD (High of the day) far exceeds actual represented percent gained.
In this instance, the lowest point was at $1.27, while the highest point was at $8.00 even. Representing a 529.921% increase