Table of Contents
What Are Red to Green Move Stocks?
If a stock crosses above the previous day’s close, that’s a popular area to set a stop loss because if the price falls below the previous day’s close, that shows potential weakness. On the other hand, if a stock crosses above the previous day’s close and holds, then that might be a potential sign of strength and continuation.
So, you’d watch if prices stay below the previous close and ride it down. If the price reverses and starts to climb back over the previous close, that’s a potential warning sign that the trend is reversing and might be a good place to cover your position. Scalping stocks is a lot easier when you apply the red green strategy.
Red Green Trading Done Right
Remember that traders are creatures of habit and pay close attention to red to green move stocks and green to red moves. Just like traders watch stock charts, candlesticks, patterns, moving average lines, trend lines, and so on, the red green trading strategy is another weapon in their arsenal. We are fans of TrendSpider as a helpful program for learning candlestick pattern recognition.
Frequently Asked Questions
- Red means that a stock is trading below previous close price
- Green means that price is trading above previous close
- Previous close line is a very important support and resistance level
- Very popular indicator among day traders
- Traders might take a long trade entry in anticipation of a previous close break
- Some traders might wait for price to break above previous close and hold first
- Short traders might take a short position in anticipation of price failing previous close
- Bearish traders might wait for a failure signal then take a short position
- Going long: use candle close below previous close as stop.
- Short: use a candle close above as stop
- Green is potentially bullish and that's when traders might take long position
- Red is potentially bearish and when traders might take a short position
- When price goes red to green many traders take a long position
- When price goes green to red that's when the short traders come in
- Going long traders use close below previous close as stop
- Going short traders use close above previous close as stop
- Candlestick patterns will give you the clues needed to buy and sell
- Reversal patterns are very helpful for early buy or sell signals
- Risk management is key when buying and selling
