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.
Video: Relative Strength
Now that you've got the basics of how to use relative strength to analyze your stocks, check out the video below and see what else you can learn about relative strength at the whiteboard.
Great talk on relative strength... vid ends by saying if we want to learn more check out the forum..... where is it please?
thanks
swadehansen
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|2009-10-27 09:23:42
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