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What is "Beta" [Stock Market Terms] + How to Use it for Trading Decisions

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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/ ★ SHARE THIS VIDEO ★ https://youtu.be/jvk-Lkwd6S4 ★ SUBSCRIBE TO MY YOUTUBE: ★ http://bit.ly/addtradersfly ★ ABOUT TRADERSFLY ★ TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better. Stock trading and investing is a long journey - it doesn't happen overnight. If you are interested to share some insight or contribute to the community we'd love to have you subscribe and join us! STOCK TRADING COURSES: -- http://tradersfly.com/courses/ STOCK TRADING BOOKS: -- http://tradersfly.com/books/ WEBSITES: -- http://rise2learn.com -- http://tradersfly.com -- http://backstageincome.com -- http://sashaevdakov.com SOCIAL MEDIA: -- http://twitter.com/tradersfly -- http://facebook.com/tradersfly MY YOUTUBE CHANNELS: -- TradersFly: http://bit.ly/tradersfly -- BackstageIncome: http://bit.ly/backstageincome
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Text Comments (60)
brian kong (15 days ago)
Thank you for your clearer explanation, just subscribed
patricia dawson (1 month ago)
Wow i understand now!! Thx u
pedro nunez (1 month ago)
Thank you!
You are more than welcome
Shawn Mokrian (3 months ago)
I'm really impressed with your art of speech, Thanks for your time!
ABYLUISA4 (4 months ago)
very clear! thank you for explaining it so great! you helped me with a finance homework I had.
Tiny Trader88 (5 months ago)
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. 😁
Josh Ua (6 months ago)
Bhavesh Modi (7 months ago)
Hi Evdakov, superb way of explaining. I liked it. Very good.
Brian Groznik (8 months ago)
Great vid
Prakash Saha (8 months ago)
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
Larry Gorman (10 months ago)
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.
Pluasok (2 months ago)
I kind of agree..well produced but misleading. Beta can viewed as a volatility indicator. But it primarily indicator of correlation with a market measure like SPY. The fact that VIX has a negative beta is missed.
Hagman BabaT (10 months ago)
Thanks for the awesome explanation mate... I'm going to shuffle my portfolio with this regards to this new information.
Joshua Ho (1 year ago)
studying my midterm exam right before the deadline and your video helps!
Sebastian Yeh (1 year ago)
Why do different firms in same industry have very different betas?
MoroccanRoll (1 year ago)
you the man, very helpful!
Angelo Natividad (1 year ago)
a big thumbs up to you! it really helped me understand more about beta
D H (1 year ago)
Very helpful. Thanks!
Dion Vainio (1 year ago)
What would it mean to beta neutral?
Lee Vega (1 year ago)
Can you be my teacher ?? I will go to your lecture everytime for sure !
amr elsadany (1 year ago)
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
Narayan chapagain (1 year ago)
Diego Morosoff (1 year ago)
that the stock you picked and the market has a negative correlation, so if the market its up 1%, your stock would be down beta%
Jacob Thomas-Smith (1 year ago)
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?
Andre (1 year ago)
I am impressed with his ability to write backwards more than anything
Jose Rivera (1 year ago)
Great video. This one was so clear to me. Thanks.
Alexandra Boone (1 year ago)
I watched several videos and couldn't get it quite right until I watched your video! Great job! and thank you!!!
Anthony Aldea (1 year ago)
Thank you so much for this video. I have been racking my brains trying to understand the textbook. You made it so understandable. Thanks!!!
Milli Rae (2 years ago)
Extremely helpful for upcoming uni subject thank you so much
Farzan Samsudeen (2 years ago)
Its a great explanation... Thank you for the service and long live...
Michael Perry (2 years ago)
Wow! the Beta click this time. You are the Best Sasha.
sadaf chuhdary (2 years ago)
it was really very good explanation.
Nikhil Halbe (2 years ago)
He explains it so well and also gives a summary in the description. What a brilliant guy!
Michael Perry (2 years ago)
Nikhil Halbe was spot on. You are Brillant!
Derick Machado (2 years ago)
Then why do we use beta in cost if equity? what exactly this formula mean ie Ke = Rf + beta (Rf-Rm)
Boa Contreras (2 years ago)
Thank you so much! People like you make this world a better place :)
TheTraveler (2 years ago)
Great video. Is it possible to follow your stock trades? do you tweet them?
freedom77 (2 years ago)
but where is the beta score listed?
1M l (2 years ago)
it helps me
Shnoshk (2 years ago)
What is the beta of bitcoin?
andreasdc2 (11 months ago)
over 9000
Andrew Gugino (2 years ago)
great videos i am a new investor and your videos are all the training of got so far thank you.
William Lee (2 years ago)
ok Sasha. Thanks
William Lee (2 years ago)
Sasha, thanks for a great video. May i know which column to click on to check the BETA at TOS platform please.
Tgallo (2 years ago)
excellent video. Great explanation, I added this indicator to my stock charts.
Daniel Buckler (2 years ago)
What does it mean when a stock exchange loses points
Aaryan amogha (2 years ago)
Sir,u told about BETA but may u explain about theta.Vega.alpha also. Plz... sir ..
Kuda Makavanye (2 years ago)
greatly appreciate your work man
Ajay Ranga (2 years ago)
Sasha! Your videos are very helpful. Thank you for making such informative videos and sharing with everyone.
alexhighflyer (2 years ago)
what do you think about tastytrade?
davet11 (2 years ago)
he's got a new shirt!
Amaz Ingman (2 years ago)
Great vid.
Amaz Ingman (2 years ago)
+Sasha Evdakov (TradersFly) Thanks for the response, the information you provide is extremely insightful and much appreciated.
Patrick Hoffman (2 years ago)
Hi Sasha really appreciate your video's, learning a lot from them! You often mention about strength and weakness. Could you do a video about how to measure strength and weakness in stocks?
Adjuster (2 years ago)
Are you writing backwards on a glass?
Ethan Con (4 months ago)
It takes practice.
Jerry Grzadka (1 year ago)
I really like your support material. It is old school writing with a marker, non of that inaccurate digital pens. It actually looks like you are writing backwards with your left hand...cool.
Adjuster (2 years ago)
+Giorgi Gogashvili Spasibo
Giorgi Gogashvili (2 years ago)
The video is mirrored, shirts have buttons on the right and he is not a leftie.

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