Lows and Highs in Stocks

Lows and highs in stocks are what traders and investors base their trading operations on – as with any market, in order to turn a profit they need to buy their merchandise when its price is low, and sell it when the price rises. Different markets have different means of measuring and expressing these highs and lows, be it spreads, pips, shares or currencies.

It is very common for traders to use charts in order to monitor the evolution of various prices and to be able to anticipate with greater accuracy the lows and highs in stocks, and as such, the best times to buy or sell.

The prices for each goods are set based on certain quotes, or percentages. The traders use a system of “pips” (acronym for “percentage into points”), which allow them to translate the relative prices of the goods into numeric values. While percentages may yield multiple decimal trade values, trade prices are generally limited to only four decimals, with the pip being the smallest unit. For example, if the EUR/USD pair goes from an exchange rate of 1.3618 to 1.3619, then the price has changed by one pip.

Traders usually keep charts on both quotes for ask price (the price the merchants are charging for one unit of their goods) and bid price (the price buyers are willing to pay for one such unit). The bid price is always several pips under the ask price, and to follow the above example, the price expressed in a bid/ask phrase would be EUR/USD 1.3616/1.3619. The three pip difference is called “spread”.

The lows and highs in stocks trading principle is valid in any market. Forex, which is the world’s largest market, with a daily turnover reaching into the trillions of dollars range, is subject to the same laws. Individual traders as well as banks and companies of all sizes trade on the currency market, and most of them employ the use of charts to interpret the different indicators.

If you would like to start a career as a trader, you should make sure that you learn the basic principles behind this business: the lows and highs in stocks, bids, asks, pips and spreads, charts and so on. Trading involves high risks, and the only way you can increase your chances of turning a profit is making sure you are in possession of as much information as possible.

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