Identifying percentage decliners is a form of technical analysis that traders use to find stocks with significant price movement. Historically, stocks with the biggest increase in price movements, either up or down, will continue to produce similar and often times predictable price movements. In this sense, the Percentage Decliners list is a starting point that investors and traders can use to find opportune entry points.
Because percentage decline measures price performance at a specific moment in time, investors should look at other metrics such as trading volume and basic fundamentals to determine which percentage decliners actually make attractive trade targets.
Many stocks show significant price movement but do so with low volume which is an underlying cause of the move. Low volume can make it difficult to enter and exit a trade because there aren’t many traders interested in owning or selling shares. An eager trader may see stock prices falling but if the trading volume is low the trend may continue.
Because stock XYZ is one of the biggest losers does not mean it is a profitable trading option. In order for a percentage decliner to be profitable, it needs to show an attractive risk/reward profile and visible catalysts for favorable price movement.