When is the perfect time to buy on the stock exchange? The 200-day line promises the answer. t-online explains how and whether this works for you as an investor.
One of the most important rules of the financial markets is learned the hard way by new investors: the market cannot be “timed”. So it’s almost impossible to do that perfect entry found in a single share.
When selling, too, you often need a pinch of luck: the ultimate point in time before a tipping point Share price discovering is difficult even for professionals.
But there are Aids, with which the seemingly unpredictable stocks can be interpreted: the Chart analysis (Read more about this here). With this method of stock analysis, 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 exit for successful stocks.
What is the 200 day line?
The 200 day line is a means to a long term Trend in a share price to recognize. An alternative term is what is known as the simple moving average – in English Simple moving average called.
Many investors use the 200-day line as a Trading support. The main advantage of the long-term course mean: It is easy to calculate and just as easy to use. Newcomers to the stock market therefore get to know the meaning of the trend indicator at an early stage.
The 200-day line goes back to the so-called chart technique, a method of stock analysis with which investors draw conclusions for the future based on past price developments – and which is quite controversial among experts. Because the course analysis leaves Fundamentals such as the price / earnings ratio and sales of a company.
Nevertheless, many investors use the 200-day line as a guide to set the limits for their buy and sell orders. So it’s worth it even for skeptics who Basic instruments of chart analysis how to master the 200 day line. Because since the heated market in the Corona crisis it has been saying all the more: Small investors are increasingly determining what is happening in the market – and less the facts that are of particular interest to professional investors.
Where do I see the 200 day line?
To the 200 day line to see, you have to form these yourself first. It’s very easy: To do this, add the current price to the closing price of the share for the past 199 days, divide the total by 200 and thus calculate the average closing price.
In the next few days, do the math Last day’s closing price and delete the closing price of the oldest day. So the line continues. Some stock exchange portals, such as the Stuttgart Stock Exchange, also offer instruments on their side that automatically calculate the 200 day line for you.
How should the 200-day-line be used?
The 200-day line is used primarily for you as an investor Buy and sell signals. If the price of the share is above this line, a Upward trend.
If the share price falls below the 200-day line, this indicates that, according to the chart technique Downward trend down. As an investor, you’d better sell the stock. The line is especially helpful when working with stop losses on your stocks.
So you can Stop loss set down when breaking the 200-day line. But beware: With volatile stocks, you should allow yourself a little more leeway. Here the stocks can only briefly fall below the line and shortly afterwards experience an upward trend again.
What does the 200-day line bring me?
The 200-day line helps you to 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 stocks are more worthwhile to get into.
You can also do that with the 200-day line Understand the behavior of many investors and in some cases even look out. Many investors sell their shares when a share falls about 5 percent below the 200-day line.
You can use this to find out about stocks that you believe in despite falling prices cheaper to board. Or, if you also want to sell a stock, you can use the 200-day line to get a suitable one Limit order to adjust.
When does the 200-day line not help me?
Not at all Stock market scenarios on the other hand, the 200-day line can be helpful. Show that highly volatile stocks such as the Biontech shares in the Corona crisis. Due to its enormous and rapid rise, the Biontech share left the 200-day line very far behind.
Anyone who wanted to get into the share afterwards could no longer trust the line as usual. In principle, the price showed an upward trend, but – depending on the news about the vaccine – it also had to contend with strong price falls. Investors who entered above the 200-day line at 170 euros have shortly thereafter lost almost 30 euros per share.
The example shows: Fundamental data as well as economic and political news cannot be completely ignored when investing. If you want to rely on the 200-day line, it is best to start when the Share freshly breaks the line – not when the course already hovers floors above it.