What is “Beta” [Stock Market Terms] + How to Use it for Trading Decisions
★ SUMMARY ★
In this week’s episode what I’d like to do with you share with you What is Beta and How Can You Use Beta on the Stock Market Tables to make trading decisions or investing decisions for your personal portfolio.
Knowing what Beta is
First off before we even get into what is Beta more important question is why would you want to know this why? Why would you want to know what it’s all about? Well the thing is, what beta really tells you, is it tells you the volatility of a certain stock or security.
How big of those movement, how big not a direction but that how large those movements can be for a stock or security relative to a neutral level. What does all this mean in layman’s terms or in simple terms?
Applying Beta to your stock picks
It means that if you’re looking for a stable company, if you’re for looking for a stock that does not whipsaw around a lot, if you’re looking for a stock that moves in a nice line fashion then you want a smaller beta.
If you want a stock that moves around a lot quicker and has a higher potential to make you more money or has a higher potential to go to the upside quicker or go to the downside quicker, typically great for day trading as well, then you want a higher beta.
An in-depth understanding of Beta in the stock market
Let’s look at beta in more in-depth. Basically, the stock market itself, the market itself has a beta of 1 so if we have the market as a beta of 1, this is how it moves. So let’s just pretend that this angle in this volatility is one.
Stocks that have a higher volatility will have a higher beta so they may have a beta of something like let’s just say one point three and if you have a beta of 1.3, this means typically your 30% more volatile than the market. So that volatility maybe something more like this so that stock has a greater volatility as it’s going up or down.
Now for looking for lower betas, companies like Microsoft or proctor and Gamble, if you’re looking for a beta of let’s say 0.8, this would be 0.8%, that volatility might be something like this, it might be very small and it moves very slow.
It very slow to the upside or the downside, so you’re little bit more stable and that’s why when things are in a panic they sell off very big, people jump to the lower beta stocks, they jump to the ones that have more stability.
On the other hand when things are going great they’ll jump into the higher beta names because that is what they want, they want a huge run to the upside they want the fastest stocks that are moving the quickest in the shortest amount of time.
Posted at: http://tradersfly.com/2016/01/beta-stock-market-terms/
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Brilliant explanation man. Thank you so much. I subbed.
amazing video just found your channel very well made videos 🙂
Thank you so much fro sharing this useful data! Greatly appreciated….
Wow i just saw SEARS beta 4.94… talk abou violent moves lol.
Thanks for helping me understand this term. I really appreciate it
Thank you sir for explaining it as it remained very easy to understand and follow. At the same time, it seemed very much useful to determine which stock to buy or sell.
Brilliant!! just brilliant!
how do you find the beta of a company?
Hi… Can we check beta on daily basis like for intraday
thank you for the class!!! it helped really really appreciate Mr Evdakov
This was amazing. A new follower as of today!!!
Very Helpful, thank you!
Good vid! That’s a cool, whiteboard Technology where are you write on the screen. What’s it called?
Thank you for the video. I liked both the information and the presentation style. You made it very easy to understand.
Thank you for your clearer explanation, just subscribed
Wow i understand now!! Thx u
Thank you!
I'm really impressed with your art of speech, Thanks for your time!
very clear! thank you for explaining it so great! you helped me with a finance homework I had.
Thank you for explaining this so well! I'm the type of learner that needs visuals along with verbal to get to the action so you are appreciated! Oh, and there he goes with the same black shirt lol! I saw that episode explaining wardrobe. ?
Thanks!
Hi Evdakov, superb way of explaining. I liked it. Very good.
Great vid
excellent… thank u..
please please sir make a video undervalued and overvalued stock how do I calculate this.
I am from India your video so powerful speech thankful to make this video and your graphics too cool thank you very much sir
Nice production… but it's totally WRONG. Beta is NOT volatility. That's easy to see because if it was true then the volatility of the market would be 1.00 = or 100% when expressed as a percentage. However, the volatility of the market is nearly always in the range of 0.1 to 0.3 (10% to 30%). This guy has NO clue.
Thanks for the awesome explanation mate… I'm going to shuffle my portfolio with this regards to this new information.
studying my midterm exam right before the deadline and your video helps!
Why do different firms in same industry have very different betas?
you the man, very helpful!
a big thumbs up to you! it really helped me understand more about beta
Very helpful. Thanks!
What would it mean to beta neutral?
Can you be my teacher ?? I will go to your lecture everytime for sure !
iam student on cma i read alot of beta but i cant understand and u i think u r the best one who explain beta thanks alot mrsasha
IF BETA IS IN NEGATIVE THEN WHAT THAT MEANS???
Great video, so few channels explain this well and in depth (most assume they know something about it already). But I have a quick question. If a stock increases by a lot consistently will that raise the Beta? Like if it's a large but smooth upward trend?
I am impressed with his ability to write backwards more than anything
Great video. This one was so clear to me. Thanks.
I watched several videos and couldn't get it quite right until I watched your video! Great job! and thank you!!!
Thank you so much for this video. I have been racking my brains trying to understand the textbook. You made it so understandable. Thanks!!!
Extremely helpful for upcoming uni subject thank you so much
Its a great explanation… Thank you for the service and long live…
Wow! the Beta click this time. You are the Best Sasha.