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ARB in Stock, Definition and Examples of Its Use

ARB in stocks is one term that is often heard by investors. This condition shows the movement of the stock.

Given that stocks are an investment instrument that has many benefits, now you should know some of the terms in it. One of the terms in the restriction is ARB or Lower Auto Reject.

If you’re still a novice stock investor, it’s a good idea to find out what exactly to do in stocks. Check out the reviews that we will discuss below.

Also Read: BANK Stock History Improves from Several Recommendations in 2022

Understanding ARB in Stocks

In the world of stocks, there are restrictions that aim to protect investors from losses. Because stocks can experience a price reversal to a fairly drastic decline.

If the investor takes the wrong step, you will get a loss. ARB is a transaction restriction when the price drops too far to touch the minimum limit.

The minimum limit is determined by the Indonesia Stock Exchange (IDX) in one trade.

If a condition like this occurs, it will automatically experience a restriction called ARB.

The exchange system will automatically reject the incoming sale and purchase, if the stock price exceeds the limit price set by the IDX.

This restriction occurs with the aim of ensuring that stock trading runs in good conditions.

Also Read: Stocks Immune to Inflation, This is a Domestic to Overseas Recommendation

Use of ARB Terms

In the world of stocks, many terms exist to describe a condition that is currently happening. For this reason, novice investors should not be careless in carrying out this one investment.

Many terms you need to know including the use of the term ARB. The existence of this term is related to the fluctuating nature of the stock.

Usually the company’s shares can experience any condition. Sometimes an investment can experience an ARA or Upper Auto Reject, but it can easily change to ARB status in the stock.

When conditions occur like this, it makes investors confused in dealing with them. So there was panic.

When the situation is normal, the IDX determines the ARB value in the range of 20%-35%.

However, after the pandemic, the ARB value has changed from 10% to 7%. The correction of changes in the value of the ARB in investment has a big impact.

Almost all types of this instrument experience ARB conditions. Even the LQ-45 stock experienced the same phenomenon.

Also Read: How to Sell Suspended Shares in the Negotiable Market, the Risk of Dropping the Price

Example

ARB has a considerable influence on the investment world. If investors do not immediately provide treatment, of course they can experience losses.

To better understand it there is an example. A share of company A was sold for Rp. 5,000 at the close of trading yesterday.

ARB limit of 7%. Thus, the shares have the lowest limit of Rp 4,650.

If the company’s shares experience a decline in price at that point, it will automatically reject the purchase order.

Thus, investors must pay attention to the ARB in stocks. Because it affects the price restrictions that have been determined by the stock exchange. (R10/HR-Online)

Source : HarapanRakyat.com

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