What do stocks that reach the upper limit mean? The fact that a stock has reached its upper limit does not simply mean that the price has reached its highest price. Stocks reaching the “upper limit” have various meanings.
First, the upper limit means that the stock quantity to buy the stock exceeds the sell quantity on the transaction day. In other words, although there was a sale order for 1 million shares in the market, the purchase order for that stock exceeded one million shares.
Second, the upper limit means that there are many people who want to buy regardless of the price. In other words, it means that the market will buy all of the stock, regardless of how many shares it sells. It is very important that buy orders come in regardless of price.
Investors participating in the stock market must buy stocks at low prices and sell them at high prices in order to earn profits.
However, the fact that there are more people buying shares at the highest price of the day means that the price is not a consideration for the stock.
The above two conditions do not make sense as a general trading common sense. Trading is the exchange of stocks and money at a price agreed upon by both buyers and sellers in intense price competition.
However, the stock that reaches the upper limit means that the buyer will buy it at the highest price of the day, but there is no one to sell the stock. This allows investors in the market to have a myriad of imaginations.
However, stocks that have reached the upper end of the market have a lot of pitfalls.
First, if a stock has reached the upper limit, then there is a reason. There must be sufficient reason to persuade many market participants, not just one or two participants. Of course, it is very dangerous to participate in buying without any reason.
If there is a reason, you should first predict how much the share price will rise after the surge.
It is risky to invest unconditionally in an item that simply rises to good news. It is like investing in news simply without evaluating the growth potential of the company or its value in the future. That kind of investment can be a big loss because of the plunge in share prices after the news has disappeared. In fact, many people have invested heavily in high-end stocks in such a way that they suffer great losses.
Second, there is no guarantee that a stock that reaches the upper end will rise further the next day. Nobody knows if other investors will buy tomorrow’s stocks up until today. Nonetheless, many expect that stocks that reach the upper end of the range will make further gains the next day. And they are making hasty investments.
If you can properly judge and analyze the stocks that enter the upper limit, the upper limit stock is a good opportunity to maximize your return on investment. However, if you make a hasty investment without proper analysis, you will have irreversible losses.