Abstract of the article
- The closing price is the weighted average of all transactions that are done on a share in a trading day
- The last price is the price at which the share is traded for the last time during the trading day.
- The base volume is the number of one type of securities that must be traded every day so that all percentage changes allowed on that day are included in determining the next day’s price.
- Sometimes it happens that with one or more big purchases, the price of a share grows suddenly. In this case, it will take some time for the final price to reach the last price. This is an opportunity that the trader can enter into the transaction and benefit from the price difference between the last price and the closing price that is determined at the end of the trading day.
- To detect such a situation, you can use the search filters as mentioned in the text.
- The results you get from the filters will give you an initial idea to buy profitable shares, which you should check their chart and other trading information and finally make the best decision.
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How to find out before the share price rises?
In this article, you will learn how to find out before a relatively large price jump. This technique can be effective in daily time. But before that, you should familiarize yourself with the three concepts of “last price”, “closing price” and “base volume”.
Last price and closing price
The closing price and the price of the last transaction are not necessarily equal. The last transaction price can be more, less or equal to the closing price. The last price is the price at which the share is traded for the last time during the trading day. The closing price is the weighted average of all trades that take place on a stock in a trading day.
Of course, this weighted average is applied on the condition that the share transactions have filled the base volume. Otherwise, the final price will be deducted according to the amount that was less than the base volume. Both “last price” and “final price” are calculated instantly on the Rahvard site. In the trading systems of the stock exchange, both the closing price of the moment and the closing price of the previous day are entered on the corresponding page of each symbol.
Base volume
Tehran Stock Exchange Company defines the base volume in this way: the number of one type of securities that must be traded every day so that all percentage changes allowed on that day are included in determining the next day’s price. For a better understanding of the base volume, pay attention to this example; Suppose the volume of the basis considered for a symbol is 200 thousand shares.
If 100,000 shares are traded in one trading day and the share has a 4% price growth, because the number of share transactions was half of the base volume, the share price growth will be divided by two and tomorrow morning it will open with 2% growth instead of 4%. The base volume for each stock exchange symbol is determined by the stock exchange organization and is listed on the tsetmc site, the Revard site, and all trading systems of the stock exchange on the special page of the same symbol.
How to use the filter to distinguish shares whose closing price is left from the last price?
Sometimes it happens that with one or more big purchases, the price of a share grows suddenly. In this case, it will take some time for the final price to reach the last price. Because as mentioned, the final price is an average of the transactions and it takes some time for this average price to rise. This is an opportunity that the trader can enter into the transaction and benefit from the price difference between the last price and the closing price that is determined at the end of the trading day.
An additional explanation is that in fact, because the final price is calculated instantaneously and is an average of all the transactions that have been done in one day, it takes a little time to be affected by the last price and grow. But how can such a thing be done? You can use search filters to detect such a situation. To do this, perform the following steps:
- In the “Asset Type” filter, select “Stocks”.
- Select “Open” in the “Icon Status” filter.
- In the “Transactions” filter, select the “Percentage distance between the last price and the closing price” option. Now select the “greater than or equal” option and specify the percentage of the distance between the last price and the closing price. Choosing numbers 2, 3 or 4 will be reasonable. The larger the number you choose, the fewer results you will find through the filters. Choosing this number will depend on your trading strategy.
- We said that the base volume is also effective on the final price. Therefore, we must have a filter to ease our worries about filling the base volume. Therefore, from the “Transactions” menu, select the “Supply and Demand Pressure” option and set it to a number between 70 and 90. Supply and demand pressure is a number between zero and one hundred. Zero means the queue to sell the share and one hundred means the formation of the queue to buy the share. Therefore, the closer this number is to 100, it indicates the willingness of the market to buy shares. But if you set this number to 100, you may face a queue and not be able to buy the share. But a number between 70 and 90 can be a logical choice so that you can be sure that the base volume will be filled and you will not stand in the shopping queue.
The bottom line is that the results you get from the filters should not be taken as revelation. Rather, these results give you an initial idea to buy profitable shares, which you should check their chart and other trading information and finally make the best decision.
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