What is Meant by Top Loser?
A security that loses value during the course of a particular trading day is called a loser. This is arrived at by comparing the price at the start of the trading day vis a vis the price of the security at the end of the day. The losers may be expressed in absolute terms or in percentage terms. If it were to be calculated in percentage terms, it will be arrived at as follows – (Current stock price – Previous closing price) / Previous closing price = Percentage loss
Subclassification of Top Losers
In order to be able to identify the top losers with a greater degree of clarity, it is important to look at them from a pointy lens. For instance, one can look at the top losers in the NSE Nifty 50 index stocks or NSE 50 mid-sized stocks. One may even filter the stocks based on its price and identify the top losers such as top losers in penny stocks etc.
Why Learn About Top Losers?
It is important to have a good idea about the top losers in the market in order to undertake intelligent investment decisions, to structure one’s trade and to get finer ratification from technical charts. An active trader can ride the wave of the market and make short term moves to reap some profits – the classic ‘buy low, sell high’ mantra can be employed in such circumstances. The losers offer a clear picture of the direction in which the market is moving. Capturing this information on a real time basis and evaluating it over a period of time will give a better sense of how things are moving in the long term.
How to Identify Top Losers?
The easiest means to identify them is by looking at financial news sources that offer screening tools and display the appropriate information. But it is important to look beyond the percentage decline while measuring performance at a specific time. It would be useful to look into other metrics such as trading volume etc. to decide if it is an attractive trade target. Some background research must be done to ascertain the cause for percentage decline – the conformity to long term trends or a distress activity in the company, or a drop by virtue of the business cycle of the company are factors that must be considered while evaluating the cause for the decline.
