use "moving averages" to buy stocks.

You always want to be in "harmony" with the markets when trading stocks. Here's a simple tool that will keep you on the "right side" of the trade.

WHAT IS A MOVING AVERAGE?: Simply take the last 20 days closing prices, add them together, then divide by 20. This price is plotted along a line (moving average). Most all charting software does this for you.

Only buy a stock if prices are trading above the 20-day moving average.

Institutional investors (hedge-funds, banks, mutual-funds, etc.) control most stock prices. They will "support" the stock at the 20-day moving average if they think it's going higher in the short-term. Use this to your advantage

Tips & Warnings

• This is an important rule that should not be broken or you will be fighting the "trend." Something you never want to do. "Flow" with the trend, never fight it.
• See our other trend trading articles for more tips.
• This is the opinion of the writer and not a offer to buy any securities. Investing in securities involves risk. Consult a professional before making any investment decisions.

By ehow.com