0

Should I Buy Red or Green Stocks?

PUBLISHED Mar 22, 2022, 7:59:32 PM        SHARE

img
imgChas Johnson

Should You Buy red or green stocks?

You should never buy a stock based on the color of a stock alone. Typically, a stock that is green indicate it is increasing in value today. A red colored stocks is going down today.

The Trend is Your Friend?

Research indicates that momentum strategies can outperform the market. This strategy buys stocks that are going up in the last 12 month period and sell stocks that have performed poorly in the last 12 month period. These strategies capitalize on companies with strong cultures performing consistently month after month and the movement of capital to a few key winners in the market; however, there is no consensus on why momentum strategies work. However, there is clear evidence that daily changes in a stock is in line with random behavior, with the caveat that the kurtosis of the daily random motion of a stock is poor with large tails indicating significant moves up and down are more common than should occur randomly. This bias towards larger moves up and down may also be the reason that momentum strategies show indications of being an effective strategy.

Why You Should Not Buy Based on Daily Change

You should not buy a stock because it is green or red because there is no correlation between the daily change of a stock today and its future movement tomorrow. The distribution of a stocks daily change can be modeled as random motion with bias towards extreme movements up and down. Even though a stock's daily price movement is bias towards more extreme upwards movement, there is no indication that a big price move today predicts a big price move tomorrow.

What does Green and Red Mean in Candle Stick Charts

Candlestick charts show green if the stock went up in a given period and red if the stock went down in a given period. The "wicks" of the candle sticks show the high and low prices during the period. The period is typically five minutes and one day. Candle Stick charts are heavily used in technical analysis to identify trading patterns in day trading. Identifying patterns in technical analysis can be very profitable, but the simple plan of buying when the candle sticks are green and selling when the candle sticks are red will not yield consistent positive return. check at Tom Hamilton's analysis using technical analysis to learn more about interpreting technical chart patterns.

Guidance for Beginning Investors

For new investors, it may help to check out our article on LINK"tips and information for investing for beginners" as well as our LINK "ultimate guide" for beginning investors. Even though investing depending on a stock's color is discourage, here are some tips for new investors:

  • Buy stock in companies that you know
  • LINK "It is Worth buying less than 1 share of stock"
  • LINK "Buy stocks when everyone else is selling"
  • Dividends are typically quarterly payouts to investors for owning stock. Get some dividend stocks


Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
An article with invisible H1 headers
Image

Ugh, how silly we have white H1 headers

What is the Purpose of StockBossUp BossCoin?
Image

What is this cryptocurrency called BossCoin? Why is it integrated in StockBossUp? BossCoin's purpose is to incentivize a flow of responsible and wealth-generating investment ideas on the StockBossUp network.

StockBossUp Updates
Image

StockBossUp is adding new features as we leverage our new BossCoin boost feature and integrate live data into the app.

Why Managing Volatility Increases Wealth
Image

Market volatility is a wealth killer. By managing the major up and down swings of your portfolio you can start to reliably grow your wealth.

How do I Manage my Portfolio's Volatility?
Image

If you keep getting nudged to improve your volatility, here are some easy tips to get that started.

StockBossUp - Diversified, Volatile, Wealth
Image

Welcome to the biggest draft on the planet! Draft the best investment team you can. Get the stats on every investor in the StockBossUp network.

Checking if marked still works
Image

Did an npm update, hoping marked still works

Taking care of business... everyday, taking care of business and working over time! And working overtime!
Image

Have you been looking at home depot lately? Sometimes it's the stocks that no one is talking about that are the opportunity. What really is opportubity?

Give Tyson Foods a try for goodness sake. Maybe you'll like the taste of its dividend. Or maybe its growth?
Image

Tyson foods? This boring stock. Well let me tell you how scrumptious this little stock is. You like dividends? You like growth? Then you need to get in the butcher business like me. Get In!

uhuiioi
Image

crtrtderesrre

Testing 123
Image

Testy mctesterson

wfwf
Image

ewfwefewf

Here is a title about titles
Image

In this description, I'll share some of the ideas from some of the ideas from some of the ideas from a time and place that come to me in my head.

This is an article without an image, hopefully this works
Image

This is an article without an image, hopefully this works. This is an article without an image, hopefully this works. This is an article without an image, hopefully this works. This is an article without an image, hopefully this works

How the grinch stole Christmas (and other tales to share with kids)
Image

It was the night before xmas and all thru the house, not a creature was stirring, except for two jerks coming up the stairs.

this title description is messing things up!
Image

This series of four webinars will be offered as a partial replacement for some of the sessions originally scheduled for BINC (BetterInvesting National Convention) which has been indefinitely postponed … due to the pandemic. More info: https://expectingalpha.com/2021/11/04/covid-cancellation-conference-nov-10-11/