Never try to catch a falling knife

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Moving average - the hallmark of smart investors for effective returns. What is it?

Transcript

Never try to catch a falling knife The catchphrase “Never try to catch a falling knife” means that a stock or index should not be bought while it is falling but one should wait until it bounces off its lows & starts an upward trend before buying it. Picking such stocks at the near bottom can result in a massive gain. However, entering these companies at the wrong time may lead to a disaster. There are cases when these stocks never rebounded to the original price for decades since they started falling. To avoid falling knife stocks, every keen-eyed investor and trader in a financial market makes his or her earnings by conducting intensive research and utilising crucial markers before every transaction. One such significant indicator, used by a variety of market participants, is the Moving Average. The Moving Average is a quick, straightforward and effective means for traders to develop an understanding of the current market trends. Let's understand more about such tools and indicators for effective investment decisions, learn to execute technical analysis on Smart Money by Angel Broking.

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