A conventional Stock market myth – 52 week HIGH/LOW is a good buy

What is 52 week high/low?

The most noteworthy and least costs that a stock has exchanged at amid the earlier year. Numerous traders and investors see the 52-week high or low as a critical consider deciding a stock's present esteem and foreseeing future value development.

As a stock exchanges inside its 52-week cost run (the reach that exists between the 52-week low and the 52-week high), investors may show expanded enthusiasm as value nears either the high or the low. A famous method utilized by stock traders is to purchase when value surpasses its 52-week high, or to sell when value falls below its 52-week low. The reason behind this system is that if value breaks out from the 52-week range (either above or below) there will be sufficient energy to proceed with the value move in a positive course.

Why is it a myth?

Whatever the explanation behind this present myth's allure, nothing is more dangerous to novice investors than suspecting that a stock exchanging close to a 52-week low is a decent purchase. Think about this regarding the old stock business sector maxim, "Those who try to catch a falling knife only get hurt."

Assume you are taking a gander at two stocks:

X made a record-breaking high a year ago around $50 yet has since tumbled to $10 per share.

Y is a littler organization has gone from $5 to $10 per share. 

Which stock would you purchase? Trust it or not, things being what they are, a larger part of investors pick the stock that has tumbled from $50 because they believe that it will inevitably make its move up to those levels once more. Thinking thusly is a cardinal sin in contributing! Cost is stand out some piece of the contributing comparison (which is not quite the same as exchanging, which utilizes specialized examination). The objective is to purchase decent organizations at a sensible cost. Purchasing organizations exclusively in light of the fact that their business sector cost has fallen will get you no place. Verify you don't mistake this practice for value investing, which is purchasing amazing organizations that are underestimated by the market.