Stock Quote Stock Market

How To Read A Stock Quote

How to read a stock quote. Sounds simple enought, right? Well, maybe not so much. One of the things which all investors should do before they invest in a stock is to chart the stock. What does this mean? This means that you follow the trends of your stock, in hypothetical terms, by reading the Stock Quote for several days/weeks before you put your money up. Whenever you are urged to "get in to this stock NOW" you can be almost assured that this is just someone holding onto shares at a loss that they want to pass off to someone else. If enough people listen to these scammers on Internet Stock chat boards and these otherwise ignorant folks BUY the stock on NO PRIOR KNOWLEDGE, the people who bought in (affectionately dubbed "bag holders") invariably get screwed. For this reason even if you're not a "chart reader" per se, you should be able to look at a stock's recent trends and see where it's going before you pony up any monies to the market.

You need to chart your stocks before you invest your hard earned money; that means you need to learn what you're looking at when you see a stock table. Yes, there is the chance that you could have missed out on a golden opportunity and you could have just turned your nose up at DDRX when it was at .36 only to see that a few short months later, it's at upwards of $30. (sigh!) All investors have this story; you inevitably will too. But you can't spread yourself too thin around and you can't be involved in stocks you're not at least a little familiar with, else you could be left high and dry. Better to eat these stocks you don't invest in and do your research on the front side than to sit on the sidelines several days or weeks later with half or less money than you once had. Trust me.

So you need to know what you're looking at when you read the stock table. Whether you're looking online or in the old Grey Lady, you need to know what it is that's being conveyed to you in these tables. Most stock tables are largely the same; your quote may differ slightly.

52W high/52W low: This is where you find the most current information from that day back 52 weeks. You can see where the stock has been; both highs and lows. This is instructive because you should know around where your stock sits in the grand scheme of things before you plunk down your money. If your current share price is trending towards the 52 week high, that can be good or bad. This is where seeing the actual stock charts; for movement and momentum over periods of years, can be instructive. I recently wrote about "support" and "resistance" so if your stock has hit resistance around this 52 week high or has bounced off of that 52 week low, then that will give you a better idea about the range that the stock is trading in.

Volume: The volume of trading is also a very important number to see. While the volume of a stock on a certain day may be low, the fact remains that stocks trade 52 weeks a year. Even in the week between Christmas and New Years; when the volume was very low; there was still trading going on. If there is high volume for your stock chances are people like the stocks prospects (because even though people are selling, others are buying) if the volume is low however this could mean that your stock is stuck in a holding pattern. This still could be a good thing as the stock could just be awaiting FDA approval, merger, buyout, or some other news. The reason that low volume could be good is that it could just mean that the sellers aren't selling. And there's nothing wrong with going long on a good stock.

Previous Close: The previous close is exactly what it says it is. This is important to know so that you can see the very small trends. If the previous close of your stock was $19.84 and today it's trading up around $23.00 that probably means there's been good news recently. However be wary of unfounded moves so strong. If your stock makes a sudden upward movement there will probably be profit taking so the price could move sharply downward. Just when and where this move will happen is anybody's guess.

Today's High/Today's Low: Knowing where a stock has traded over a period of time is important but if you're close to buying a stock you want to know where it's been lately. The high and low of the day's trade is insightful when you're planning on buying a stock. You never want to execute a market order; this type of move is only useful when a stock is taking off and you're trying to catch it on the way up. If you look closely at the last trading day's highs and lows you'll be able to make an educated guess about what levels you yourself should buy in at. Conversely if you've held a stock for a while you may want to take a little off the table. Looking at the most recent highs and lows will enable you to find a good strike price to sell your stock at.

Open Price/Close Price: This term is exactly what you'd think it was; the most recent trading days open and close. Again, from a very short term prospective it's good to see which way a stock is trending to find an entry. If your stock at a $14.50 open and a $13.75 close and all your research shows you that it should be trading around $15.00 a share, then you see that the obvious sentiment on this stock at these levels is bearish. You may wish to put an order in for maybe $13.25 and move it downward through the trading day if your stock looks to break that bottom. If you have confidence that your stock will go up shortly anyway, then these small movements shouldn't affect your overall impression. However getting in at a good price is essential to getting enough shares of your stock.

1 yr Target Estimate: The one year target estimate is an interesting metric. Because of the melee we've been through in recent months, this number changed quite a bit for some stocks. If the stock you're researching doesn't have this number, that just means that whoever is quoting you the stock's price doesn't have enough of a consensus to make a guesstimate. If there is no number for the one year estimate that could also spell trouble, AKA, this stock may not even be trading in one year's time!

It's very important to do your research when you're investing in stocks and that includes knowing how to read a Stock Quote. If you have read the quote and still have questions, best to consult your broker or financial advisor before making any rash moves. It's your money; do your best to hold onto it!

By Jesse Schmitt - Back in New York. Still searching.  

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