Stock Market: Upper circuit and lower circuit, and open high low strategies
As many new investors know, the trading game was hit by the manipulation of the stock price from its potential price.
Sometimes it acts like a punishment for many investors according to the moves taken by the investors. Circuit breakers represent the volatility safeguards for investors. Let us move into the meaning and execution.
Stock Market: upper and lower circuit
The concept of the upper circuit and lower circuit comes into the stock market to protect the investors from drastic price fluctuations, price drop, band on stock exchanges, or share price hikes.
The upper circuit is the highly accumulated price that the trade on the stock is done on the designated day. In contrast, the lower circuit is the price that the trader guesses to be the lowest on the designated day of trading. But the upper or lower circuit limit can be set by the percentage upon the determination of the stock market.
Significant factors of the upper circuit and lower circuit
- The circuit filters are only applicable on the previous day of the closure trading.
- You can find the circuit filters on the website of stock exchanges.
- The stock commodity mainly starts from the initial circuit.
- If the condition occurs when the stock hits the upper circuit, then it means that there are only existence of buyers, not sellers.
- On the other hand, if the stock hits the lower circuit, it indicates only sellers. In this case, there is no existence of buyers in the stock.
- In such conditions, intraday trading changes into delivery.
What do you mean by the open high low strategy?
The name of this strategy shows two aspects, one for risk and the other for advantages. The strategy used in the open high low strategy is to act as the signal when the stock or index has the same value for both high and low in buying the shares. Also, a sell signal is generated when the indexes and stock have the same values for both open and high.
A way to execute the open high low strategy?
- Go and log in to your account with your ID or password.
- Then select the predicted stock to raise and add the stock to the wishlist.
- Then know the desired trends.
- Know the approximate graph strategy that consists of the growth factor and compliance with the terms of share.
- A market price or forecast accuracy of stock open before you; now see the varying stock price and invest accordingly.
Conclusion
In conclusion, we would like to tell you that The circuit limit is essential to managing the trading activity in the stock market.
When stock prices were permitted to go up or down indefinitely, some traders would fluctuate the price to make more profits. This is the reason to put the limits on the stock exchange place circuit to keep checking stock movements continuously.