Velocity Strategy
Various strategies to pick velocity stocks:
Momentum
Mean reversion and retracement
This is a strategy that relies on the financial theory that asset prices tend to revert to their long-term averages over time. Investors look for stocks that have deviated significantly from their historical mean or trend and have the potential to bounce back or consolidate.
Earnings Breakouts
This is a strategy that capitalizes on the idea that stocks that surpass market expectations are likely to experience significant price movements in the days following their earnings reports. Investors use fundamental analysis to identify the stocks that have delivered positive earnings surprises and have strong growth prospects.
Event Based Strategy
This is a strategy where investors exploit the opportunities created by corporate events -- such as mergers, acquisitions, and earnings reports -- that has potential to have a significant impact on the stock prices of the involved companies.
News Based Strategy
External factors which are difficult for retail investors to comprehend such as geopolitical events, central bank policies, political events and government policies can have a significant impact on the market and create unexpected opportunities for investors. Investors need to closely track relevant news and use their expertise to find profitable investment opportunities based on the market reactions.
Holistic approach, integrating various factors including technical analysis, short-term events and market expectations must be followed while analysing stocks to capitalize on the opportunities created.
