medium · 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 to see whether the news wires reveal the exact reason behind this sudden volume spike before acting.
- Add more shares now to pull the average cost basis nearer the fixed $60.00 profit target.
- Hold right until $60.00 is hit, since today's record volume simply confirms strong bullish momentum.
- Heavily tighten the stop or exit, as this 'Buying Climax' overrides the arbitrary price target.
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