Buying stocks that are down but above their 200 day moving average.
As the old saying goes, "The trend is your friend." How true it is. Yet, so
many fight this truth and to their own peril. The market behaves better above
its 200 day moving average than below it. And the average gain of the
market is far greater when prices have been above the 200 day moving
average than when it has been below it.
This is not to say that you cannot find good stocks that are worth buying and
are below the 200 day MA. But as a whole, without looking at any other
indicators, it's easier to make money when buying the market and stocks
when the trend is up, not down.
This rule, of course, only becomes increasingly more effective as other
screens or indicators are put in place.
This would be a good place to go into technical analysis as it relates to
improving your trading but this book is about giving you strategies and/or
modifications that are not available elsewhere. If you would like to go deep
into technical analysis (TA) there are many websites that can give you good
information (there are plenty of free sites). However, I would ultimately
suggest going into your local book store and finding one you can take home
and study. With that said, I must admit I am not a huge fan of TA. I have
personally found it over done and blown out of proportion as far as its
success claims. If you do know how to use several of the indicators (my
personal favorites are: MACD, RSI, and MFI) and use them as a group of
confirming indicators along with other strategies they can be very helpful.
Well, that's all for now. Below, you will find a link for a FREE personal trading coaching session.