Monaker Group Inc fka MKGI (MKGI)

[Be-Realistic]

Heavy-Volume Price Drop Means One Thing

A heavy volume price drop means only one thing for certain: There are more shares available for sale than there are willing buyers at the current price. It could mean that a lot of shareholders are dumping their stock. Or it could be that a major shareholder has decided to sell a large block of shares. The law of supply and demand takes over, forcing the stock's market price lower.

Volume

Volume refers to the number of shares of stock that trade. Most stocks trade within a predictable volume range each day, and some stocks normally trade a greater number of shares than other stocks. The more thinly traded a stock is, the harder it is to predict volume. If trading volume significantly increases in a particular stock, there's usually a reason for it. That reason can be as significant as a major change in management, or as inconsequential as programmed trading based on computer models.

Consequences

As long as the company's fundamentals are sound, a heavy volume-fueled price drop can create an excellent opportunity to buy stocks at bargain-basement prices. If you employ a buy-and-hold investment philosophy, changes in your stock's market price either up or down are immaterial, because you're in it for the long haul. It's a different matter if there's a fundamental reason why investors are dumping the stock. For example, if the company has filed for bankruptcy or just got hit with a major lawsuit, it might be appropriate to cut your losses by selling at the going price. And if the price drop involves a stock you hold in a margin account, the decreased value of your stock could put you at risk for a margin call.