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Stock Market Volatility
Stock market volatility is what makes trading work. Market inefficiency occurs when traders and investors do not have time to do fundamental analysis or complete technical analysis with tools such as Candlestick charting. This can lead to wide swings in stock prices before technical analysis catches up and the sort of stock pricing predicted by stock fundamental analysis reasserts itself. During the time of volatility and market inefficiency traders can often effectively scalp on the upswings and downswings of stock price.
Long term investing hates volatility and day trading likes it. Having a stock trading strategy in place before unexpected news of a takeover bid or product recall sends a stock into a tailspin will help the day trader take advantage of swings in stock price. Stocks that usually trade within support and resistance zones can break out to the upside or downside. If the day trader is in a profitable trade as the breakout occurs he or she can ride it to a nice profit. If he or she is caught in losing trade in these situations, stop loss strategies are necessary to reduce investment risk.
Even over the longer term, taking advantage of stock market volatility and stock volatility are what can enrich the savvy investor. An investor can place a limit order which is to buy at or below a given price or sell at or above a given price. If he or she expects market movement but does have to time to watch the stock price all day long, a limit order good for the day or forever can be placed to buy stock or sell stock taking advantage of stock market volatility.