What is All-Time High (ATH)?
An all-time high is the highest price a security has ever reached in its trading history. Stocks making new ATHs are considered to be in strong uptrends.
All-Time High (ATH) Explained
Research shows that stocks at all-time highs tend to continue outperforming. This is counterintuitive for many traders who assume that stocks at ATHs are 'expensive' or 'due for a pullback.' In reality, new ATHs indicate strong demand and bullish momentum. The strategy of buying breakouts to new highs is one of the most well-documented and profitable approaches in trading.
Real-World Example
AAPL makes a new ATH at $198. Instead of waiting for a pullback, a momentum trader buys the breakout with a stop at $193. The stock continues to $220 over the next month. Studies show that buying new ATH breakouts outperforms buying pullbacks about 60% of the time in trending markets.
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