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Stock Buy and Sell Signals 101

Finding stock buy and sell signals that are reasonably accurate most of the time is not that hard if you realize how to set up your indicators correctly. Optimizing moving averages is a simple, yet fairly accurate way to locate the direction a stock is going, and when a change may occur.

The one thing that investors must be aware of when using moving averages as a buy and sell indicator is the whipsaw effect. Basically this is the "noise" created by short term buying and selling. In other words, the moving averages may have small hills and valleys within a increasing or decreasing line. If traders were to trade whenever the moving averages gave you stock buy and sell signals, you would have some enormous) trading fees.

There are some simple steps to practice to make sure that your moving average setup gives you proper stock buy and sell signals without a lot of distraction. Most experienced traders use the 10 period and 30 period simple moving averages to calculate when a solid opportunity to enter and exit a stock presents itself.

Another strategy is to work with the 8 moving average and the 20 moving average which shows a slight advance notice. The shorter the moving average, the faster the line moves. Simplified. this means that the faster moving line is bullish when it is above the slower moving line, and bearish when it is below it. To go long on a trade, wait until the fast line drops down and crosses up through the slow line. In many cases, this is the signal to place a buy, as it is near the bottom of that period. Keep an eye on the fast line closely as it begins to turn and flatten out near the peak. As it curves downward and crosses through the slow line, this indicates your sell signal.

The moving average indicator is a good tool to use for stock buy and sell signals, but it is just that, a tool. Use it with a combination of additional technical indicators to determine if the stock reversal is going to happen, or if it is actually a false indication.

Financial Independence Through Successful Investing

Even with the chaotic economic mess that the world economies have gotten themselves into, the lure for personal investments is still on many people's agendas. Why should this be so? To understand this question we have to go back in time to the days when hardly anybody was into personal investing.

The Post War Era

For many years after the end of WWII, most people just got by from paycheck to paycheck. The mentality towards money was that it came from hard work - period. Money was treated like cash or something comparable. People earned their money and kept the cash in their pocket, in the bank, or in a savings account. Credit was not as easy to come by, so people learned good money management skills; they lived within their means and saved a little bit when they could.

The Inflation of the 1970's

Like a bolt of lightening out of the blue, after the care free days of the 60's, the inflation of the 70's and into the early 80's affected everyone. All of a sudden, people's savings lost their value as the cost of living rose. Those most affected were the people living on fixed incomes like pensions. On the other hand, fortunes were made by those that were into personal investments - like property or precious metals.

The Financial Services Industry

As a result of all this, the financial services industry was born. All of a sudden we were bombarded with advertisements telling us where to invest our money. We were all of a sudden bewildered by the many choices of "packaged financial products" that offered us anything from timeshares and unit trusts to pension plans and offshore investments.

The Stock Market

Many people either lost money with some of these financial services or they were wary of them. So, the stock market became a place for the ordinary person to do is own personal investing. It is true that many got burned after the crash of 1987 and the mini-crash two years later. But that just made people more conscious of the fact that you had to learn the ropes of investing in the markets - after all, some were making a fortune in these times.

Opportunity for the Knowledgeable

Throughout the last half century we have seen many changes regarding investment opportunities. We now have more information than ever and we are more clued up about the stock market and trading shares. Even with the recent recession gripping the world, nothing beats the return on investment of good quality equities.

The Key to Success

Nowadays, the key to success for personal investing is knowledge. You must study how the world economies of today work and learn a few tricks of the trade. Successful personal investing starts with investing in your money education. Unfortunately, we didn't learn good money management or investing skills at school - maybe future generations should.

So, find yourself a good solid personal investment course; the Internet is a good place to search but be wary of the numerous online scams. Like I said, look for investment courses that teach you the fundamentals plus the tricks of the trade - do not look for investment schemes, make money opportunities, or anything like that. Search for knowledge and turn yourself into an investment expert for your financial independence and to safeguard your retirement.