Stock Learning: Good Base v/s Bad Base
Good Base
Vs
Bad Base
Good base
"Easy to spot with eyes without much difficulty"
The stock's price moves sideways or trends slightly up/down in a straight, consistent manner.
Good base
"Easy to spot with eyes without much difficulty"
Price bars show small, uniform movements rather than wild swings (Back & for moves)
Good base
"Easy to spot with eyes without much difficulty"
No Random Gaps
Good base
"Easy to spot with eyes without much difficulty"
Strong candle closings with less wicks
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Bad base
"Easy to spot with eyes without much difficulty"
Erratic Price Movements:
The stock's price swings up and down frequently within a range, with no consistent direction.
Bad base
"Easy to spot with eyes without much difficulty"
Erratic Price Movements:
Candlesticks have long wicks (shadows) and varying body sizes, showing indecision and volatility.
When to Trade These stocks
Bad base
"Easy to spot with eyes without much difficulty"
Erratic Price Movements:
The stock stays within a broad price range, but the swings between highs and lows are sharp and unpredictable.
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Bad base
"Easy to spot with eyes without much difficulty"
Erratic Price Movements:
The price might briefly break above resistance or below support, only to reverse back into the range quickly.
These "fakeouts" frustrate traders looking for a clean breakout.
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