What is the best time to buy stocks?
This is a very simple explanation , so you can decide for yourself, when is a good time to buy shares and when you should not.
I continually receive inquiries through various channels asking for recommendations to buy. Most people focus on what to buy , when the most important thing is when to buy .
It hardly matters what you buy. If the overall market goes down, chances are that what you bought will go down as well. If the whole market goes up, your shares will probably go up, and you will make money.
The idea is to buy when stocks are cheap, when the overall market is cheap .
The problem is that we tend to think that a low price and a cheap price are the same thing, but this is not the case. Stocks can always go lower or higher than they ever have. Here you should know about AGYP stock that is currently at its lowest and can increase anytime
Let’s see an example to know if it is a good time to buy or not
In our example, we are going to focus on the assumption that you want to buy shares of one or more strong Spanish companies (Forget about the chicharros!)
We want to wait until the market is cheap and buy at that time. When it gets expensive, we will sell the shares.
This is the daily chart of the Spanish market index, the IBEX35. Below this chart we have added a technical indicator called stochastic. This indicator can tell us if the price is expensive or cheap (which is not always the same as high or low).
These are the rules:
If the stochastic is below the green line (20), the market is cheap . It is a good time to buy .
If the stochastic is above the red line (80), the market is expensive . It is a good time to sell .
Between the green and red lines is a bad time to buy or sell, whether or not you have shares. Do nothing .
Of course, the worst of all would be to buy when it is expensive and sell when it is cheap.
Here you have, again, the same chart of the IBEX35 with the stochastic added below:
A particularly conservative way to act on the stochastic is to buy only when the indicator crosses the lower horizontal line from bottom to top (20) and sell as soon as the stochastic rises above the upper line (80).
With this simple strategy, you will buy when it is correct and sell when it is correct, even after the market becomes even more expensive, or even cheaper.
Of course, this approach is not valid in a bear market (where buying makes little sense).
An immediate trick to tell if the market is bullish, bearish, or sideways is to look where the blue line is pointing at your far right on this chart . Here is an example of a bull market, another of a bearish moment and here a lateral phase:
One more tip : Don’t buy peas. Buy strong stocks, the stronger the better, such as Inditex, Telefónica, Santander, Repsol …
These values behave in a very similar way to the IBEX35 (the peas do whatever they want) and, looking at the graph above, you will be able to predict whether, in general, all the great Spaniards will go up or down, if they are expensive or cheap. This way you will know when to buy and when to sell, regardless of whether you buy shares of one, another, or several at the same time (which would be the best).
Of course, this strategy for buying and selling shares is a plan that I propose in good faith and I understand as good, but Novatos Trading Club does not represent any financial advisory service, so it is not responsible for profits or losses in which each can incur following this strategy.