easy · Volume Spread Analysis effort-vs-result-spread
A stock is rising on expanding volume and wide spreads. Suddenly, a bar appears with the widest spread seen in weeks and ultra-high volume, closing in the middle. The trader's target was $60.00, but the stock is only at $55.00.
What is the most disciplined risk management action?
- Wait for the news to announce the reason for the volume spike before acting.
- Buy more shares to push the average price closer to the $60.00 target.
- Hold until the $60.00 target is hit, as the high volume confirms strong momentum.
- Heavily tighten the stop or exit, as this 'Buying Climax' overrides the arbitrary price target.
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