How the 200-day moving average helps when buying stocks

When is the perfect time to buy the stock market? The 200-day moving average promises the answer. How and if this works for you as an investor.

The most important things at a glance

One of the most important rules in the financial markets new investors learn the hard way: the market cannot be “timed”. So it is almost impossible to it perfect start found in a single warehouse.

You also often need a pinch of luck when selling: the ultimate time before the tipping point share price to detect is difficult even for professionals.

But there is Assistive devicesby which the apparently unpredictable stocks can be interpreted: the chart analysis (Read more about this here). Particularly well-known in this method of stock analysis is the consideration of the so-called 200 day line.

t-online explains to you what is behind it and how you can use it to create the right entry and the right leap for successful sharing.

What is the 200-day moving average?

that 200 day line is a means to the long term trend in a share price to recognize. An alternative expression is the so-called simple moving average Simple moving average called.

Many investors use the 200-day line as a Trade support. The main advantage of the long-term course average: It is easy to calculate and just as easy to use. Beginners in the stock market therefore learn at an early stage the meaning of the trend indicator.

The 200-day line goes back to the so-called charting technique, a method of stock analysis in which investors draw conclusions for the future based on past price movements – and which is quite controversial among experts. Because the course analysis allows it basic such as a company’s price-to-earnings ratio and revenue.

Nevertheless, many investors use the 200-day line as a guide to set the limits of their buy and sell orders. So it’s also worthwhile for skeptics there Basic instruments for chart analysis how to master the 200 day moving average. Because since the heated market in the Corona crisis, it has been said all the more: Small investors increasingly decide what happens on the market – and smaller facts that are of particular interest to professional investors.

Where can I see the 200-day line?

To 200 day line to see them, you must first create them yourself. It’s very simple: add the current price to the stock’s closing price over the past 199 days, divide the total by 200 and calculate the average closing price.

In the coming days you calculate Last day’s closing price and delete the closing price for the oldest day. So the line continues. Some stock exchange portals, such as the Stuttgart Stock Exchange, also offer instruments on their website there automatic calculate the 200-day line for you.

How to use the 200-day line?

The 200-day line primarily serves you as an investor Buy and sell signals. If the stock price is above this line, a uptrend.

According to the charting technique, if the stock price falls below the 200-day line, this indicates a downward trend there. As an investor, you should then sell the share better. The line is especially useful when working with stop losses on your stocks.

That’s how you can stop loss set lower to break the 200-day moving average. But be careful: With volatile stocks, you should give yourself a little more leeway. This is where stocks can drop below the line for a short time and experience an uptrend again shortly thereafter.

What does the 200-day line bring me?

The 200-day moving average helps you better assess the market for a single stock. At the same time, you can also do well with this instrument Compare stocks in a similar asset class and see which stock is more worth investing in.

You can also do that with the 200-day line Understand the behavior of many investors and in some cases even appear. For example, many investors sell their stocks when a stock falls about 5 percent below the 200-day moving average.

You can use this to buy stocks that you believe despite falling prices cheaper to enter. Or, if you also want to sell a stock, you can use the 200-day moving average to find a suitable limit order set to.