In the stock market investment business that is characterized by so much volatility, there is one investment point that has attracted a lot of consideration by both small investors and large ones and this is investing in shares that have hit their 52 weeks records.
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Understanding 52-Week High Shares
A 52 week high share means that the share of a particular stock has reached its highest value in the one year period. This valuation is considered as evidence of good performance and above all a sign of upward trend. Those who target such stocks have the opinion that any stock with a particular security trading above its fifty-two high is apt to increase.
The Psychology Behind the Strategy
The psychological notion of getting into 52-week high business is followed by the principles of the market stream of technical analysis. The fact that a stock is at a 52-week high usually attracts more investors’ attention to this particular stock and media coverage as well. This can also translate into additional buying pressure on the asset class, and thus to a new spike in the price.
Also, many investors who earlier traded the stocks may feel that they have made a mistake selling their stocks and might want to buy it again, increasing the demand. This is a well-known effect that has been observed in many studies, where initial price increases known as the “52-week high effect” indeed lead to further extent price appreciation.
Implementing the Strategy
Screen for 52-week high shares: Check on the breakout section in your online demat account to screen the stocks that have made a new yearly high.
Analyze fundamentals: Do not look solely at the price change. Check the technical soundness, growth potential, and position in the industry of the company.
Consider relative strength: For growth investment identify stocks with high returns relative to the industry or the market average.
Set stop-loss orders: For protection, decide where to undo this strategy and cut the losses in case the trend changes to the opposite side.
Diversify: Never concentrate your risk on a single aspect of the activity. Diversify your investments, to invest in more than one 52 week high shares and invest in a variety of sectors.
The Role of Online Demat Account Opening
In the current world, it is easier to implement this strategy, especially given the possibility of online demat account opening. Dematerialised account is necessary for effecting the transactions in shares electronically. Opening one online offers several advantages:
Convenience: The whole process can be completed from the comfort of your own home.
Speed: Begin investing fast since all accounts get approval shortly.
Access to tools: There are many online financial platforms that offer research and analysis to enable individuals find 52 week high shares.
Conclusion
Trading in 52-week high shares can be a good proposal for those who aim at investing in shares with a positive trend. However, it needs much monitoring, much risk control and deeper comprehension of the market situation. It should form only one of the components of an overall investment strategy based on various investment staking plans.
For people who are thinking of trying this strategy, firms such as 5paisa provide easy to use application for opening dematerialized accounts and other trading activities. 5paisa is a premier fintech company into investment services including share trading, mutual funds, etc. They operate largely on the internet and their offer prices are equally cheap for those investors who wish to put into practice strategies like 52 weekly high shares.
