Stock Market Investing: Timing the entry and exit

So you have done your research on a particular company to determine that its stock is worth investing in.  Now how do you determine when to buy – just so that you will get the best price within a period that you are willing to wait for?  And how do you determine when will be a good time to sell knowing that directions may have changed?

The art of timing your entry and exit in the stock market is what the professionals commonly refer to as “technical analysis”.

Technical analysis , in other words, is about reading the historical chart of the stock price (or index price) along with all the information that can be derived from the chart.  Knowing how to read a stock chart can make all the difference; here are a few things you should know about technical analysis to trade successfully in the share market.

What Is Your Style Or Approach To Trading Stocks?

Investors and traders can both use technical analysis, but how you approach the stock market can determine the importance of it.  Investors who look to increase value of their stocks over years need technical analysis just as traders who want to increase value in a matter of days. The point is, long and short-term investors both need technical analysis but the way you use it can change through your style of trading.

Simplicity Is Key

Sometimes, technical analysis can become an overwhelming task, when you try to use too many indicators. (An indicator is a piece of information derived by looking at the price history from a certain perspective).  In reality, you only really need to know five or six indicators at the end of the day to trade successfully.  In fact, many professional traders succeed using simple analysis that you saw above.  So the real secret is – simplicity – keeping things simple is the way forward in stock market trading & investing, as well as in using technical analysis.