Stock Market Data Calculations – Percentage vs Points
There are two simple factors to consider when analyzing stock value or more price point changes (for most investors, the most important figures): Point of change and percentage change. I see most of the comments, ratings, suggestions, that is, speculation on the stock market, all about the percentage, an easy to understand and very useful factor. However, observing the market in this way is inherently limited to the inventory that can be considered. Including the measurement of changes through the point to provide a complete, more diversified market view, often overlooked by many investors
For example: If you buy a stock of $ 50, sell $ 55, 10%, point income of $ 5 / share. The important concept / difference in the use of these two indicators is that one (percentage) is based on the dollar you invest in, and the other (points) are related to the number of shares. Quite obvious but funny devil in detail
If I buy stocks in the conventional way low and sell high, as shown in the example, the return is obvious. However, what happens if I try to use price changes in another direction ($ 55 to $ 50 or short)? Again, according to Points, I earned $ 5 / share, BUT, I am only 9.1%.
Also, if I change my example, say the stock only increases to $ 51 when I sell my only 2% of my investment. For those who only invested $ 4,000 to start paying off, the disappointing $ 80 (you paid $ 60 for the deal). It will make me around the next week, but it is barley enough to make the risk worth it. But if I could buy 5,000 shares, ok, I could get a lot at $ 5 in Starbucks.
Investment with points rather than a percentage of the concept is useful if you have a lot of money put into stock and / or if you are looking for profits in a declining market. These concepts define two types of investors: the main focus is on the percentage change (I do not want to speak for you, but this is me); they want little money to profit from it;
I would like to emphasize the focus that while the concept of point investment is not directly used for small investors, it does help them "bypass" larger investors who are usually controlling a particular stock price that is being done. So it's a very useful information to look at the stock and try to figure out what the next step will be going to be close to the hand
Conclusion: If you have less money to invest you will almost certainly find a percentage gain. However, there is a large amount of transactions, and points-based transactions can become quite fruitful and allow investors to make better use of the different changes that occur in the market.
Finally, if you are looking at the market in large numbers, only stocks are defined by percentage changes, and you usually only see those stocks with little change in value. To include higher-priced stocks and familiarity with their volatility, you need to look at the changes from a point of view. What has become very interesting is the price of fertile land, these two often intersect (about $ 50 near the range). Here, cautious investors, with this support for their convergence of knowledge, can get decent growth.