V-Shaped Recovery

Posted in Finance, Accounting and Economics Terms, Total Reads: 444
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Definition: V-Shaped Recovery

V shaped recovery is a type f recovery observed under technical analysis of price movements of the securities. Generally it is observed in a type of economic recession and recovery of the securities resembles a "V" shape in their charts. 

Any parameter which is desirable for economy can first fall then rise forming a V shape. e.g. in case of recession it may happen that GDP may fall then in recovery it may rise back forming a kind of V Shape.


For example:

• S & P BSE Sensex observed this V shaped pattern during the recession of 2008 and recovered back by the overall growth of the economy and companies.



Advantages:

• Investors and traders can make money in a short period of time

Disadvantages:

• It creates a temporary fear among the traders and investors about the economy of the country

• People even lose money if they do not wait for the recovery time and sell their holdings at the bottom of the V shaped graph


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