https://hotcopper.com.au/threads/life-saving-lost.4259898/page-55?post_id=34019691#.WzUVFRZ_WEc
Some points to consider?
Ideally we want to invest in strong companies with solid earnings growth. A share on a price chart is generally either going down, sideways, or up. I use simple technical tools to determine the trend. One or more moving averages on a chart provides a quick visual check of a company's financial health.
One of my rules is to only buy stocks that are trading above a 200-day moving average. The 200-day MA is not some magic critical number. The 200 value after years of back testing and research, is a good compromise.
3. Sell any stock that falls below the 200-day moving average. This will save a trader from being involved with the likes of RFG, TLS, BIG, FLC, and many other disaster stocks.
4. Never buy a stock trading below the 200-day moving average. These stocks are weak for a reason, and more often than not, only progressively get weaker.
Immediately selling a stock when it falls below the 200-day moving average is an important risk management strategy. IMO, strong companies have no business trading below the 200-day MA. Here are some recent examples why it is important to both get out and stay out:
TLS (Telstra): most recently fell below the 200-day MA at $5.10 (Feb 14, 2017). Current price $2.62.
RFG (Retail Food Group): most recently fell below the 200-day MA at $6.13 (Feb 24, 2017). Current price $0.425.
FLC (Fluence Corp): most recently fell below the 200-day MA at $0.82 (Aug 09, 2017). Current price $0.40.
Chart, page-4221
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Open | High | Low | Value | Volume |
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Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
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12.0¢ | 98766 | 1 |
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2 | 80000 | 0.105 |
6 | 514932 | 0.100 |
1 | 25000 | 0.095 |
2 | 51111 | 0.090 |
Price($) | Vol. | No. |
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0.120 | 98766 | 1 |
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