If you primarily trade penny stocks it’s probably safe to say that you might have never come across the term ‘stock beta’ before, and if you have there’s an even greater chance you might be misusing it.
Which is why in this article you will learn a simple way of understanding stock beta & learn how to use it effectively to plan your trades.
Stock beta (beta ratio) is the amount of distance between a stock’s price volatility in relation to the rest of the market. Or to state it simply, stock beta tells you how a stock’s price moves in relation to the overall stock market.
The beta ratio is a number given to individual stocks as well as the entire market (which in this case is the entire S&P 500). The S&P 500 is given a beta of 1 & stocks that also have a beta of 1 are considered to fluctuate at the same rate of the market in terms of price.
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