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Least Volatile Stocks

Least Volatile StocksThe stock market, as a whole, is considered to be extremely volatile by most investors. Though this is largely true, there are some stocks which manage to keep themselves aloof from the action in the markets and these are known as the least volatile stocks. There are many people who suggest investors to get into the least volatile stocks to protect their capital during a steep market fall. However, one must remember that capital protection is not our only goal in the stock market, and we also look for stock price appreciation. So, a completely non-volatile stock can be a 'dead stock' which gives zero or negative returns at times. So, it becomes essential for us to study historical prices of stocks, their movement pattern and past return to select the best stocks for our portfolio. Given below are the characteristic of the least volatile stocks.

Characteristics of Least Volatile Stocks

1. Least volatile stocks show little to no movement in all types of markets

2. At most times, these stocks have very small volumes traded on them. This means that investor interest is less or lacking in them

3. These are the stocks which are totally out of news and away from the eye of market traders/investors either due to poor results, corporate governance problems or lackluster future

4. Intra-day movements are very small and hence, these stocks are sidelined by day traders

5. Least volatile stocks can belong to any sector of the economy. However, experts believe that power sector stocks are less volatile as compared to stocks of other sector companies

6. Least volatile stocks can be the best defensive bets in times of a bad market if chosen properly

Most volatile stocks are from the banking, consumer goods and construction sector, mainly because these sectors are in the news due to increased corporate earnings and recommendations by analysts. While picking less volatile stocks, you should try and forecast the future of the companies and get into the stock if you find it to be convincing. If you end up choosing the wrong stock, then you may lose an opportunity to earn in the market, and may also end up making losses when most other investors make good profits.

The comparison between volatile and less volatile stocks given below will make things very clear for you.

Volatility in Stocks
Most Volatile Stocks Least Volatile Stocks
Many times, only expert and professional traders are aware of how to trade volatile stocks due to experience and practical trading Beginners would find tracking and understanding moves in least volatile stocks better than the volatile stocks
Stop losses are a must for trading most volatile stocks since they are mostly bought for short term trades Stop losses might not be essential since they are generally bought for long term investment
Most useful for intra-day trading and short term trading Most useful for delivery based long term purchase
Risk is much larger as volatility can drive stock price up or down Risk factor is much less as compared to the most volatile stocks
Exiting these stocks might be difficult at times due to lack of buyers when price is going down constantly Exiting these stocks is much easier due to presence of plenty of buyers

Least volatile funds, or least volatile stocks, can always be good choices for conservative investors. By considering the above mentioned factors, I am sure that you will always be a profitable trader/investor in the market. All the best!

DISCLAIMER: This article is just for reference purposes and does not recommend any stock market transactions.


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