Trade Price Response

Definition of 'Trade Price Response'


The setting up of a trade which is based upon what the price of a security does once it reaches a certain critical level. After the security has to reacted the level, the security's positive or negative reaction is used to set up trades. Traditionally, the critical levels are areas of resistance or support for the security.

Investopedia explains 'Trade Price Response'


For example, say that the $25 level of a stock has been an important level of resistance, and it has had difficulty in moving above that level several times. A trade price response would be the setting up of a trade based on what the price does once it again reaches the $25 level. If the an upward move toward this level were to slow, a trader may enter a short position on the stock as the price has again failed to move above the level. On the other hand, if the price moved above the $25 level a trader may enter a long position in anticipation that the price will head higher after breaking through this critical level of resistance.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. National Best Bid and Offer - NBBO

    A term applying to the SEC requirement that brokers must guarantee customers the best available ask price when they buy securities and the best available bid price when they sell securities.
  2. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  3. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  4. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  5. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  6. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
Trading Center