What Exactly Is A Parabolic Move In A Stock?

Posted By on Feb 25, 2015 | 0 comments


You'll often hear experienced traders say to one another "Hey, check out this parabolic move in $XYZ." What exactly is a parabolic move (aka a "para") and why is it so fascinating among stock traders?

A perfect para is a steep one-directional move in a stock that looks like panic buying/selling. It is usually accompanied by rising volume which peaks at the apex/bottom, and then a sharp reversal in price direction with decelerating volume.

There are many reasons why a stock may para. Some of them may be: 1) an institutional fund carelessly executes a large order to be purchased at the market, 2) company specific news or rumors hits the wires, and 3) buy stops/sell orders get triggered one after another when resistance/support levels get breached.

Please see the following example in $PNW stock:

stock-chart-parabolic-volume-up

Why do day traders like myself look for parabolic moves? They are fairly easy to trade to scalp some fast money in a short amount of time. Sign up at mooktrader.com and learn more on what all the signs of a parabolic move mean and how you go about successfully trading them.

- Hubert Tsai

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