We going to show you how to find out the volatility of any stock. When you know how volatile a stock is, it will help you set your buy and sell prices. The volatility is also called the Beta, and when you discover that Beta value, it will help you understand what to expect from that investment.
Check it out!
Hey guys, I’m going to show you how to find out the volatility of any stock, how that
can help you profit, and why you need to know about an investment’s Beta value. First, let me say thank you for being here. You guys are awesome, and you are why we make all these site.
When you subscribe to this site, you get the inside track to post like this one, designed to help you profit from trading penny stocks. OK, enough of the lovey-dovey stuff, let’s get right into this. Get a stock in mind – one that you own, or maybe are interested in.When you check out the volatility of that stock, you are going to have a better idea of how to trade it, what to expect from the price going forward, and where to set your buy or sell prices.
Now, I’m going to use an online financial tool that everyone has access to, but this information is also available through paid services, your broker probably, and a few
other free sites.
I know everyone can use Yahoo.com so we will use that for this site. There is no excuse to be unable to follow along with everything you are about to discover.
So, go to Yahoo.com and click on Finance. That will take you to Yahoo Finance.
There is a form field to the top that is a search field, don’t do anything with that.
There is another field off to the right where you can put the ticker symbol of the stock that you are interested in and that will pull up all the more in-depth information about that specific company.
You will now see an item called “statistics” – that is what you should click on, and its going to give you all sorts of analytical data for the specific stock you had selected.
Now, over to the right hand side there is a column called trading information. There you should see a number for the Beta value. The beta information is how volatile the stock is, in comparison to the overall stock market average.If the Beta value equals 1.0, then that stock is exactly as volatile as the overall market.
If the Beta is 2.0, then the stock in question is twice as volatile, while if it is 0.25, then it is one quarter as volatile, and so on. When you see how volatile the stock is, you have a better idea how to trade that stock.
For example, when you see your shares spiked or dropped 20% or 30% in a day, but the Beta is at 2.5, you would know not to put too much stake in the move in the share price.
That price activity could likely just be that stock’s standard volatility, which you would know because you checked the Beta value.
In addition, the lower the Beta value, the closer or tighter you could set stop loss limits.
Stop losses are much simpler than they sound, and are very important, especially in relation to penny stocks.
We explain how important they are, and how to use them, in another recent article, so please make a point of checking that one out.