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What Are “Stocks In Play” And How To Find Them? 

August 7, 2023

"Stocks in play" refer to those equities that are experiencing increased trading activity and volatility due to significant news, events, or market trends. These stocks attract heightened attention from investors and traders seeking to capitalize on potential price movements. The reasons for a stock being in play can vary, including positive earnings reports, merger announcements, regulatory approvals, or shifts in industry dynamics. Investors closely monitor such stocks as they may offer potential opportunities for quick profits or heightened risks. However, caution is advised, as trading in “stocks in play” can be speculative and subject to sudden reversals in price direction.  

An indicator many traders use to find Stocks in play is RVOL. RVOL (Relative Volume) trading is a strategy that involves analyzing the trading volume of a stock relative to its average volume over a specified period. It helps traders identify abnormal or significant changes in trading activity and potentially uncover trading opportunities.  

RVOL is calculated by dividing the current trading volume of a stock by its average volume over a specific time frame. This ratio provides a relative measure of volume strength, indicating whether trading activity is higher or lower than usual.  

Traders often use RVOL as a confirmation tool alongside other technical indicators or price patterns. When RVOL is above 1, it suggests that the trading volume is higher than average, indicating increased market interest and potentially signaling a stronger price move. Conversely, an RVOL below 1 indicates lower volume than average, suggesting decreased interest or a lack of conviction in the price action.  

By incorporating RVOL into their analysis, traders can gain insights into the intensity of market participation and potential shifts in supply and demand dynamics. It can help identify periods of increased volatility, breakout opportunities, or trend reversals.  

However, like many trading strategies or indicators, RVOL should be used in conjunction with other tools and analysis to make well-informed trading decisions. It's important to consider other factors such as price patterns, support and resistance levels, and overall market conditions to validate trading signals generated by RVOL.  

This post is for informational and educational purposes only.  It is not to be construed as investment advice, or a recommendation of any security, strategy, or account type.  Investors must be sure to understand all risks involved with any trading strategy, including commission costs, before placing any trade.   Inclusion of specific security names in this blog post does not constitute a recommendation from us to buy, sell, or hold.  
Further, this post is not an offer or solicitation for brokerage services, investment advisory services, or other products or services in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the securities laws or other local laws and regulations of that jurisdiction.  The provision of the services referred to in this material is subject to relevant local regulation and practice, and not all the services described may be available in your particular jurisdiction.  Any investment decisions made by an investor shall be based solely based on the investor's independent analysis taking into consideration their financial circumstances, investment objectives and risk tolerance.  Although the information has been produced from sources believed to be reliable, no warranty express or implied is made regarding its accuracy, adequacy, completeness, legality, reliability, or usefulness.

We are not affiliated with any third-parties or service providers mentioned in this post. Past performance of a security or strategy does not guarantee future results or success. 

Brokerage services are provided through Think Alpha Securities LLC, Member FINRA and SIPC.  116 Commons Way, Princeton, NJ 08540. Not insured by the Federal Deposit Insurance Corporation (FDIC).

Options Risk Disclosure:
Customers must read and understand the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Options trading subject to eligibility requirements.

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