Volatile Stocks – Should I Buy?

What are Volatile Stocks and How to Identify them. Buy or Avoid these Stocks?

Volatile Stocks – Should I Buy? What are Volatile Stocks and How to Identify them. Buy or Avoid these Stocks?

What are volatile stocks?

Volatility means tendency to change rapidly and unpredictably, especially for the worse. In Stock Market in India, volatile stocks generally means shares of those companies whose price fluctuate rapidly during a trading day.

Fore Traders dealing in Intraday Share Trading or Day Trading and Long-term Investors, meaning of Volatile Stocks could be different.

• For Intraday Traders, it could mean stocks with high difference between the high and low price of of the stock during a trading day.
• For Long-term Investors, it could mean stocks that are most active stocks with highest trade volume.
• Few other investors go for all kinds of complex calculations to identify such stocks.

So, volatile stocks are those that are affected by stock market fluctuations in terms of Price and Volume. Generally, equity shares of small and mid-cap companies are classified as volatile stocks. Such stocks are considered as high-risk, high return stocks.

Advantages:

1. High Return
2. Lower Cost
3. Lower demand, low competition
4. Fall in market value
5. Suits many investment goals

Disadvantages:

1. High Risk
2. Value Trap
3. Sectoral Downtrends
4. No Dividend

Also Read:

• How to Pick Best Stocks to Buy in India
• Top 10 Textile Companies in India by Market Cap
• Intraday Trading Tips and Strategies for Beginners

Volatile Stocks for Intraday Trading

Most beginners and traders in stock market look for most volatile stocks for Intraday Share Trading or Day Trading or Margin Trading and Options. However, this is Wrong Approach to make money in the Stock Market in India.

99% of such investors will lose their money. I personally suggest to stay away from Intraday or Day Trading. It is NOT Investment. It is Gambling.

Also Read:

• Best Investment Options for High Return
• Why Invest in Textile Stocks in India?
• Diversified Portfolio – Why?

How to identify Volatile Stock?

You could identify such stocks by beta index. This index is calculated using complex formula that includes stock market fluctuations. Shares with a beta value of 1 are considered to be relatively safe for investment. While beta value more than 1 indicates high risk.

Also Read:

• Right Time to Buy Stocks
• When to Buy or Sell Stocks
• Share Market Crash – What to Do? Buy, Sell, Hold?

Should I Buy Volatile Stocks?

Many new investors and beginners to share market often ask whether they should invest in volatile stocks / shares or not.

The answer is NO – Volatile stocks have too many risks involved. Stock prices can rise or fall to a great extent within a very short period of time. Picking Best Stocks to Buy at the right time is the secret to success in stock market business.

If prices of a stock is falling too sharply or rising too sharply, don’t think it is worth buying. Try to understand the reason behind such sharp rise or fall then decide to buy or sell the stock.

Be cautious in a volatile stock market!

Read:

• Share Trading Mistakes to Avoid
• Investment Portfolio Management
• Stock Market Trends and Signal – How to Understand

FAQs: Volatile Stocks

Conclusion & Disclaimer

Should I Invest in Volatile Stocks?

Well, it depends on your approach. Are you an Intraday Trader or a Long-Term or Short-Term Investor? Traders who can take high-risk and can spot the High-risk High-potential Shares can invest in such stocks.

Traders looking to make quick money must avoid such stocks. They will eventually lose all their money.

Also Read:

• What is PE Ratio (Price-To-Earnings Ratio)
• Fundamental Analysis of a Company
• Types of Orders in Stock Market in India
• What is Equity Investment?
• Stock Market Terminology for Beginners
• How Stock Market Works?
• What is Demat Account?
• Top 10 Companies in India by Market Cap
• What is Rolling Settlement Cycle in Stock Market?
• Top 10 PCB Manufacturers in India
• Circuit Filters and Trading Bands in Stock Market
• Top 10 Mobile Phone Manufacturers in the world
• What is Short in Share Trading?
• How to Predict Stock Market Direction
• Top 200 Listed Companies in India
• When to Invest in Stock Market
• How to Invest Like a Professional Expert?