Trading opportunities - terms

Buying price for trading opportunities is often set lower than the current price. This does not mean that the stock is not worth buying now, but rather that it is possible to achieve even better results by waiting a little. For examply by placing a buy order with a price limit equal to the given buying price.

Target price is set to the price the stock is assumed to reach within the given time horizon. This level is often computed using the height of the formation, the ceiling of a trend channel or a resistance level.

Stop loss is given as two prices. The first is the limit that the stop loss is set at. If the price of the stock closes the day on or below this price, it should (according to the strategy of trading opportunities) be sold. It will often be difficult to sell the stock at exactly the stop loss price, so in addition, a "stop loss estimate" is given. This is calculated as the stop loss limit minus half of the normal daily variation of the stock price. This is seen as a realistic sell price when using stop loss. For stocks with low liquidity it can be difficult to use stop loss, and if the price falls substantially below the stop loss level, it may be smarter to wait for a reaction up than to sell at a low price.

Note that the stop loss level applies to the closing price. If the price reaches the stop loss level intraday, this should not trigger selling the stock. If the closing price triggers the stop loss, it can often be a good idea to sell at the opening auction the following day. Alternatively, one could set a limit based on how the market develops.

Risk/reward ratio: The risk/reward ratio is calculated as the upside potential vs. the downside potential, i.e. the reward of a successful investment (selling at price target) compared to the result in case of a failed investment (selling at stop loss). The downside potential is always set to 1, so the higher the upside potential, the higher the return is, taking the risk into account.

Note that the likelyhood that the target is reached, or the likelyhood that the stop loss is triggered, is not taken into account. These are factors the user should evaluate.

Time horizon gives the upper and lower limit for how much time it is estimated to take for the price to move from the buying price to the target price.

Support and resistance levels: If support or resistance levels exist very near the calculated buying, target or stop loss prices, the prices are adjusted to these. It may for example not be smart to buy at a price of 8.90 if there is resistance at 9.00. It may also not be smart to sell at a stop loss of 6.60 if there is support at 6.50, or to have a target price of 12.70 if there is resistance at 12.50.

Score: Every trading opportunity is given a score between 0 and 100. This score is shown in both the tables and on the details pages (in brackets after the title). The higher the score, the better the stock satisfies the criteria that theoretically define the trading opportunity, and the better the possibility to make a profitable trade with the stock. Note that several of the technical indicators that we measure per stock are not included in the computation of score for trading opportunities. Some of these, such as support and resistance, trend direction and volume balance, can be very important for the technical outlook of a stock. The trading opportunities with the highest scores will therefore not automatically be the best trades. We therefore recommend users to look at the whole picture, short and long term, and for example also evaluate fundamental information before trading. Please also note that risk is not included in the calculation of the score. Two stocks with the same score can have very different risks. Stocks with very low liquidity will be excluded from trading opportunities, but the liquidity requirements to be included in trading opportunities are relatively low. Only trading opportunities with a score of 70 or higher are listed, but institutional users can change this limit by going to "Profile".

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Investtech guarantees neither the entirety nor accuracy of the analyses. Any consequent exposure related to the advice / signals which emerge in the analyses is completely and entirely at the investors own expense and risk. Investtech is not responsible for any loss, either directly or indirectly, which arises as a result of the use of Investtechs analyses. Details of any arising conflicts of interest will always appear in the investment recommendations. Further information about Investtechs analyses can be found here disclaimer. The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.


Investtech guarantees neither the entirety nor accuracy of the analyses. Any consequent exposure related to the advice / signals which emerge in the analyses is completely and entirely at the investors own expense and risk. Investtech is not responsible for any loss, either directly or indirectly, which arises as a result of the use of Investtechs analyses. Details of any arising conflicts of interest will always appear in the investment recommendations. Further information about Investtechs analyses can be found here disclaimer. The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.

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