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Beta is a technical indicator of issue volatility. If the issue is about as
volatile as the market average, Beta = 1. If the issue is one and a half
times as volatile, Beta = 1.5, twice as volatile, Beta = 2, etc.. If the
issue is less volatile then the market, Beta is less than 1. An issue half
as volatile as the market average would have a Beta of .5.
About 4689 stocks out of about 10,600 have a BETA less than 1 and are not as
volatile as market. While I don't use such indicators and have them computed
for me by data vendor, I am unsure of their methodology in preparing beta.
What is the "market"?
While market is now down 192 on the Dow and 50 on the Naz, there are stocks
making new highs. If the general market measured by some index is up or
down, should not effect the buy/sell decisions if a signal was given by your
system or trading plan. Now you must go beyond your stock(s) and call the
market also. At what level would you call the ups and downs of an index?
intraday? interday? if you bought a Dell at 60, what level on S&P500 would
you sell it? What decline in "market" would cause you to leave the market
on the long side?
Don't get me wrong. I look at the indices and try to guess their direction
and extent of movement, but I sell and buy stocks on their individual
readings.
Richard Estes
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