Above The Market Definition
Above the market is an order made at a price higher than the current market price, this order can either be an order to buy or sell. An order to purchase or sell an item at a price substantially higher than the current market value is an instance of above the market.
Below the market is the direct opposite of above the market. It is a market situation where an order is made at a price substantially lower than the current market price.
A Little More on What is Above The Market
Traders that want to buy or sell at a price higher than the current levels are called momentum traders. Momentum traders are short sellers that leverage on short-term price action when trading their stock. Basically, these traders use above the market as strategies to enter short-positions in the stock market. They trade in a direction and often wait for a trigger in the market, they lay wait for the market market to offshoot a resistance level and this is when they make an order just to benefit form upward trend. Momentum traders use a limit order to sell just to occupy a short-position in the market, especially when they perceive that the stock has been overvalued.
Above the Market Order Types
Below are the three common examples of above the market orders, they are;
- Stop Order to Buy- this is a situation where a trader waits for a stock to break through a resistance level so that he can place an order to purchase the stock at a price above the current market price.
- Limit Order to Sell- traders can also use this method as a way of placing a limit order to sell at a particular price higher than the current price in the market.
- Stop Limit Order to Buy- this is a technique used by traders that do not want to pay high prices due to the failure to meet a standard or deadline usually called slippage.
Reference for “Above the market”
Academic Research on Above the Market
Ten years of sale-and-leaseback transactions in The Netherlands: Large-area office space contract rent some one-fifth above market rent, Hordijk, A. C., Rompelman, D., & Koerhuis, L. (2010). Journal of Corporate Real Estate, 12(1), 26-32. This paper presents an overview of the sale-and-leaseback transactions in The Netherlands over the last decade and compares the rents and yields in these transactions with what is common in the market presently. It uses a straight mathematical calculation method. It also uses a unique dataset provided by Vastgoedmarkt.
[PDF] Stock Returns, Efficiency of Beta and the Probability to Grow at an Above-Average Rate Relative to the Market: Evidence from a Logit Model, Serra, R. G., Fávero, L. P. L., & Martelanc, R. This paper uses logistic regression models to verify the characteristics that aid in determining the probability that stock prices will rise above the market in a day of considerable market growth. It selects October 13th, 2008 as the day and considers 461 companies that are listed in the NYSE in the analysis.
[HTML] Do small caps generate above average returns in the Brazilian stock market?, de Souza, M. J. S., Ramos, D. G. F., Pena, M. G., Sobreiro, V. A., & Kimura, H. (2018). Review of development finance, 8(1), 18-24. This article creates a method that is based on an automated trading system applied to the Brazilian stock market and studies the relevance of small caps to the investor. It suggests that in the case of Brazilian stock exchange, even though high returns are probable, the profitability of technical analysis of small caps is the same to strategies using blue chips.
[CITATION] MIG rises above the market turmoil., Lee, J. (2001). Asiamoney, 12(8), 6-6. This paper shows that investors have become more risk-averse as portrayed in the bond markets. It states the way the market is responding to signs of slowing growth is a cause of concern. Various economists have developed a model that is based on the historical predictive power of the stock market, credit spreads, and the yield curve.
[CITATION] One asset class rises above the market carnage, Williams, F. (2003). Pensions & Investments, 31(2), 17-17. This article explains that in the current market carnage, large-capitalization stocks are the most favored by investors compared to large-cap value funds. It also states that the fact that stock funds had beneficial flows stood in contrast to the selloff that was experienced in the first quarter of 2018. This quarter had some of the highest outflows in history.