What is a sympathy play? A sympathy play is when one stock performs well, because another stock with a similar situation has already risen. The concept is all about psychology. If one stock performed well for a certain reason, then it is comprehensible to think a separate stock could perform well for similar reasons. Below we will list numerous examples.
Examples of “sympathy plays:”
- A stock in a particular sector makes a big move, so therefor other stocks within the same sector make big moves (i.e. gold stock, tech stock, coffee stock, etc…)
- A stock puts out news and rises, so other stocks with similar news releases rise as well
- A bottom play (i.e. a stock that has been downtrending but then consolidates at the lower end of its chart for a period of time) makes a big move, so similar charts make big moves as well
- Earnings are well received for a particular company and causes company’s in the same sector to do well as well
- A double or triple zero stock (i.e. $0.00x or $0.000x) makes a big move, so other double/triple zero stocks start to make big moves as well
- A stock in a particular sector gets bought out and makes a big move, so other stocks in the same sector make big moves due to speculation of another buy out
We urge our members to watch this video where we show 8 real-market examples of “sympathy plays.” Sympathy plays can be very profitable, and they are important to understand so you can then decide if you want to incorporate them into your trading strategy. Moreover, once you have an understanding of them, you might understand better why certain stocks make the moves they do.
What’s the #1 benefit to understanding sympathy plays? Well say you see a stock go up 200% and you missed the run, understanding how sympathy plays work means you can make the money elsewhere. Find out why the stock rose 200%, and then look for similar stocks that haven’t made a big move yet, and they may soon go up a lot because of the other stock. So next time you miss that news runner, start looking for a company that just put out similar news that hasn’t ran yet.
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