How to know when to buy stocks and when not to buy stocks
If you want to buy stocks but don’t know how to start, this is a quick read that will be very useful. Whenever we think about buying shares, the first thing that comes to mind is which stock to buy, but initially, we should think about when it is most feasible to do so.
A golden rule
Generally, when the market goes down, it is most likely that the stock you have bought will also go down, and conversely, if all the stocks in the market go up, it is almost certain that the one you bought will go up and therefore you will make more money.
So, the idea is to buy when stocks, in general, are cheap, i.e., when the market, in general, is cheapest.
How to think about prices
Keep in mind that a low price is not the same as a low price. This is often confusing, but it is not really the case. Shares will not be at a fixed price; even if they are at a low price, they can always go down further and therefore be cheaper, or, on the contrary, they can go up further.
Basic rules so as not to die trying:
There will always be measuring indicators on stocks, and if these are below the green line after 20, this would indicate that the market is cheap and, consequently, it is a good time to buy.
On the contrary, if the indicator is above the red line after 80, it would indicate that the market is expensive and, therefore, the perfect time to sell.
If it is between the two lines, it is neither a good time to sell nor to buy. Doing nothing, in this case, is the best thing to do.
The worst thing you could do is to buy when the stock is expensive and sell when the stock is cheap, as you will lose money that you could invest in the future.
What is stochastic, and how can it help you to know when to buy stocks and when not to buy stocks?
It is quite important that you know terms like this that will be very useful. Stochastic is an oscillator indicator that is used on markets that move sideways. This is constructed thanks to the price of the closing price of the last session of an asset in relation to its maximum and minimum and moves in an interval between 0 and 100.
The information provided by the stochastic is quite reliable. However, from time to time, it can give inaccurate clues; it is true that it is much better than any other data you can get off the web or on the web from unauthorized sites.
How do you know when a stochastic signal is false?
Although this is very difficult to know concretely, it is very important that you have a good broker who will put a stop when it is already at about 2% of the capital below the entry point.
So it is vital to choose a good broker that allows us to know the information of useful indicators.
The broker will allow us to have accurate information about whether the indicators are giving false signals, as well as being able to stop our investment when the capital is in danger is for this reason that it is very important to select a reliable broker that allows us to not worry so much and not think so much about the investment.
There are many guides on the internet, but without a doubt, one of the best can be found at invertirenbolsaweb.net/en/.
Analyzing before acting is important
It is important to bear in mind that in order to buy or acquire shares, you must first look at the fundamental aspects of the company and even more so if you are interested in the company.
It is essential to think about: Do I want to pay that much for this stock? Is this the right time to do it?
To answer these questions, you have to know that although there is no totally reliable prediction, it is important that you know how to recognize the behavior of the shares and their consequences. The key is to analyze the recent behavior of the share you want to buy. This will avoid disappointment in the future.
Key points to know when it is the perfect time to buy
Start with an exhaustive analysis of the price and PE Ratio of the share.
Compare the stock with others in the same sector.
Avoid entering after big rallies, i.e., avoid entering at the end of a trend.
Remember not to enter after a fall. It is possible that after a share loses value, it will never recover, so taking advantage of a very large fall can be risky.
Think about long-term strategies, so evaluate your position over a long-term period of at least six months to a year.