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The term "best techniques" is a bit vague and can be interpreted in a number of ways all of which impact the answer to the question. From a big picture perspective, there are three imporant issues that every long term investor and short term trader must consider in order to be successful in making money in the Stock Market. They are:

  1. Finding the best stocks to buy (what to buy)
  2. Finding the best timing for buying those stocks (when to buy)
  3. Identifying the best timing for selling those stocks (when to sell)

Most investors and traders focus on the first question as they should. However, if investors or traders fail to pay attention to the second question, they're making a fatal mistake as timing is highly important.

One of the safest ways to invest in the stock market is referred to as "trend trading". If you're unfamiliar with the term trend or trending, I encourage you to click on this link for a tutorial on the subject Tutorial on Trends and Trending.

Here are some key fundamentals to follow when looking for the best times to invest in the market.

  1. It's important to understand that the bulk of the money in the stock market is being invested by large financial institutions like banks, insurance companies, hedge funds, pension funds, and mutual funds. When these institutions are buying, the market moves up. When these institutions are primarily selling, the market moves down.
  2. One of the best ways to determine whether the market is moving upward or downward is to look at the trend in the Standard and Poors 500 Index (symbol SPX). This index is often referred to as the bellwether indicator for the market and the economy.
  3. Investors and traders ought to be looking to buy stocks when the market is trending higher. When trending, the market is more likely to keep moving higher. That makes it an excellent time to be "in the market".
  4. Investor and traders ought to be buying stocks that are trending higher.
  5. Stocks are categorized into sectors and industry groups. There are roughly 9 to 12 sectors and within each sector there are many industry groups. These groupings are important because they group together businesses that are similar in terms of their products and markets.
  6. If a sector is moving higher or an industry group is moving higher, that is significant.
  7. If you are a "trend trader" you prefer to invest in stocks when the stock price is trending higher, the stock's industry group is trending higher, the stocks sector is trending higher, and the stock market is trending higher.

In summary, any technique that you use to make money in the market should incorporate an assessment of what to buy, when to buy, and when to sell.

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12y ago

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