trading 52 week low strategy

This is really an interesting question and even I have posted a similar interrogation in ourdannbsp;wire channeldannbsp;to translate what the general investors/traders think about buying a stock skinny its 52 hebdomad range.

As you can see, though 56% prefer purchasing stocks just about 52 week squeaking, still its not a leading percentage. IT's almost 50–50, half of them believe buying at 52 week high is good and remaining believe its buying at 52 week low that industrial plant well.

There are multiple research papers publicized regarding the traders/investors doings when stock price reaches certain levels.

So I decided to make a quantitative analysis to find what is the actual impact along buying a stock near its52 week high vs 52 week low.

Rules of Game:

Buy the stock at 52 calendar week high and die down from it if the breed hits 52 week blue.
Buy the stock at 52 hebdomad low and exit from IT if it hits 52 week inebriated.

Lease's consider scenario united. Take example of Maruti tired cost. From 2003 to 2022, information technology has given signal retributory 4 times.

It has easily delivered 100%+ returns multiple times.

If we have used the same principle of Buy the stock at 52 workweek high and exit from IT if the stock hits 52 week low for Pharmaceutical company stocks like Lupin, you would have really ended up capturing multi bagger and exiting from information technology at the outside time.

Lupin gave buy entry in the year 2001 and for next 15 years it has ne'er touched 52 week low. And when the downtrend began for Pharma stocks, information technology gave the exit signal at the right time. And the return was nou blowing 14500% in just one trade.

So the prevai number 1 dannbsp;not only helps you make high returns, IT helps you to make the exit at the right time.

What if we followed the minute rule of Steal the sprout at 52 week low and exit from it if it hits 52 calendar week broad.

People who thought Lupine available at attractive price and bought when it first off touched 52 week first gear on March 2022, its downcast 50% now.

But you would still make believe decent returns atomic number 3 well sometimes, check the case with Maruti if you followed rule telephone number 2.

Let's consider recent hot stocks likeHEG,even though 3 retired of 5 trades are negative, still the over all gains is more than 1700%+ returns if rule 1 is followed.

If rein 2 is followed, we end dormy 4 out of 5 trades profitable merely still look at the over all returns, lot little.

Basically,

the rule number one Bargain the stock at 52 calendar week squeaky and exit from information technology if the stock hits 52 week low is like equitation the movement. You would embody making highest return equally long As we ride the trend.

the rule number two Buy the line at 52 week low and outlet from IT if it hits 52 hebdomad high is comparable mean reversion. You would be making limited revert when the pedigree reverses from low and starts going up. But remember you have to through lot of pain in the ass in this scenario(like Lupin, SunPharma), American Samoa the stock would observe going bolt down and we would not know when the recovery happens.

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