Home » Parabolic

Parabolic

« Back to Glossary Index

Last Updated on: 19th January 2021, 07:55 pm

Parabolic describes a market that moves a great distance in a very short period of time, frequently moving in an accelerating fashion that resembles one half of a parabola.

Movements can be either up or down but usually are up.

When prices arc upward at an ever-increasing speed, they form a parabolic curve, which should cause us to feel ever-increasing caution.

With parabolic moves, we never know when the final top will arrive because of the frenzy of buying driving the move, but we know that vertical moves cannot be sustained, and ultimately we can expect that the parabolic will collapse, with prices falling as quickly as they advanced.

Parabolic up moves are exciting to ride, but there is the almost certain danger that the rocket will run out of fuel, resulting in a rapid collapse of prices.

Trying to pick the final top for this kind of move could be hazardous to one’s health, but being aware of the potential danger can be useful in managing positions.

Related
Monetary Policy

Monetary policy refers to the actions taken by a nation’s central bank to influence the availability and cost of money and credit to Read more

Kathy Lien

Kathy Lien is an expert in global currencies, author, and Managing Director of BK Asset Management. For retail FX traders back Read more

European Parliament

The European Parliament is the European Union’s law-making body. It is directly elected by EU voters every 5 years. It is a Read more

Open Position

An active trade that has yet to be closed.

« Back to Glossary Index