PostHeaderIcon Signs That A Stock Has Reached Bottom

It is a general rule in stock market trading to buy low and sell high. Buying stocks that are considered cheap but may have a lot of potential to gain more becomes the main aim of stock traders. But most of the time, it is finding that stock that has reached its bottom limit that offers stock traders and investors the best opportunity to gain.

Bottomed Out Stocks

The stock market is usually characterized by trends happening at various periods. This also directs where most stocks from various industries go- whether it is going up or going down. Just as stocks may reach a certain pinnacle in terms of its price that may then has nowhere else to go but down, there are also stocks that has finally reached rock bottom and have nowhere else to go but up. It is right timing for seasoned stock traders to buy those stocks that have just bottomed out and are about to go on its way up. There are certain signs that they look for. Here are some of them.

Behavior In Its Sector

Most stocks are usually grouped together according to their respective sectors and industries. And where the industry is headed, so will the direction of a certain stock sector go. If news that a certain industry is on its way of recovery after suffering a beating at the market, most stocks belonging in its sector will generally be on their way up.

Changes In Stock Volume Traded

Another indication that a certain stock may be bottoming out is that the trading volume for it slowly lessens. In a market where a stock may be on a downward spiral, stock volume treaded drastically increases, with more sellers trying to unload stocks in order to avoid further losses.

But as the downward direction eases, the trading volume for the said stock begins to lessen. It might be an indication that less and less owners of such stocks are deciding to keep their shares. The lesser volume traded may lead to possibly more buyers in the market than sellers. The growing demand may start bringing that stick price up once again.


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