Relative strength comparisons can help you make smarter investment decisions.
by S. Wade Hansen |  Read/Post Comments | Share on Facebook
Relative strength is a measurement that tells you which stock, mutual fund or ETF is stronger when compared with another stock, mutual fund or ETF. Relative strength measurements are extremely useful when you are trying to narrow down a list of good stocks you are considering investing in. By identifying the stocks that have been strong performers in the past and buying those stocks, you increase your chances of making successful trades. Imagine you are watching a tennis match at Wimbledon where the #1 seed is playing the #27 seed. Who do you think is going to win? The #1 seed, of course. Is there a chance she could lose. Sure there is, but there is a much greater likelihood that she is going to win because she has proven in the past that she is a winner. The same concept applies to stocks, mutual funds and ETFs. Those that have been the strongest in the past have the best chance of being the strongest in the future. Taking Your Next Step Once you're comfortable with relative strength, it's time to move on and learn about How to Create a Watchlist for your Stocks, Mutual Funds and ETFs. Related Articles & Videos - Fundamental Analysis - Technical Analysis More...
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