Stock Trading Basics: 52 Week Range

By: Stephan Smith
Generally, when people think of the stock market, they tend believe that its difficult or takes years to get a good understanding on how it works. But it's not as difficult as one may think. In fact, if you have a good enough grasp on reading and interpreting a stock’s quote summary, then you have what it takes to make educated small scale investments. Now remember that I said small scale investments, because you don’t want to perform medium to large scale investments based solely on the stock’s quote summary. You are going to need to do more research and more investigating on a stock before planning to invest larger sums of money. Nevertheless, the stock’s quote summary is still an important resource where you can quickly gather vital data on any stock.

One of the most valuable pieces of information included in a stock’s quote summary is the 52 week range. The 52 week range displays the stock’s lowest trading price and the highest trading price for the year. This data in invaluable because you will be able to get a good feel of where the stock has been.

The data is also helpful in estimating the stock’s future prices. If you look at a stocks current trading price and see where it falls on the 52 week range, you will be able to make an educated estimation on where the stock is going.

Here is an example that should give you a better understanding of how to utilize the 52 week range. Imagine you find a stock titled ABC. ABC’s current trading price is $51.94. You are planning to keep the stock for more than a year and make it a big player in your portfolio, but you don’t know if investing in the stock is a wise decision. Then you take a look at the 52 week range. The lowest price the stock has been at this year was $4.32 and the highest the stock has been $15.21. Would investing in this this stock be a wise decision or not?

Well let’s reevaluate the facts. The stock’s current trading price is $51.94. The 52 week range said that the stocks lowest trading price for the year was $4.32. Here is a side note, whenever a stock’s trading price is under $5.00, it would make the stock a penny stock listing. The highest trading price the stock has been at in the last year was $15.21. Based solely on the data, provided investing in this stock would not be a wise decision. The current trading price very much inflated and there is no telling when the price would crash back to its normal prices. Though that was a very simple example, it is evident how important the 52 week range is. So whenever you are planning to invest in a particular stock, or if you are just browsing around, remember to glance at the 52 week range. It can be a determining factor on whether a stock increases or decreases in price. Don’t forget that the 52 week range is only one factor out of many that should be taken in to consideration.

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