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How to get better at timing your stock purchases

Buying and selling stocks and shares may seem from the outside like an easy task. To the uneducated observer, all that is required is a click or two of a button based on a quick glance at a price chart. But the reality is that the purchase and sale of shares is a process that requires precision – otherwise, it may result in a financial loss. This article will offer some ideas on how a trader can get the timing right when dealing in stocks and shares.

Get your information

The first, and arguably the best way to time stock purchases is to arm yourself with as much information as you possibly can. For example, price chart information allows a trader to analyse swathes of past price fluctuations to identify previous points of vulnerability – and causes of swings. Tools like MetaTrader, which contain a wide range of price chart analysis functions, can help you pick out these trends in an efficient way – even over long periods.

And information from the more comprehensive economic calendar is also a great resource to have on hand if you’re finding that your timing needs some improvement. Say you’re planning to buy up a range of Australian stocks, but there’s an impending general election on the way for Australia: it may be worth holding off on the purchase until the uncertainty is out of the way. But without having an economic calendar in place, you may miss this altogether.

Hold your nerve

It’s wise to make sure that you have a firm strategy in place before you decide to start trading. Too many traders fall into the trap of abandoning their plan in the event that something dramatic or unexpected happens. But by having a strategy in place, you can increase the chances of holding your nerve and avoiding sudden reactions. You can also use your broker’s tools to help you implement timing controls. For example, setting stop losses means that your stock can be sold automatically at a time when a particular, maximum level of loss is reached.

Prevention over cure

It’s also important to remember that not even good timing can solve a bad initial stock pick. Traders should consider finding recommended shares from experts, and always remember that they need to do their due diligence before purchasing a stock. You can hedge against drops in value by making sure you analyse the figures under the bonnet of the company in question, too. After all, if a bad stock pick is made and the trader incurs losses, that cannot be cured or reversed by better timing.

Unfortunately, there’s never any guarantee that stock purchases will pan out as you hope. But by ensuring you choose good stocks to begin with and making sure you stick to an informed strategy, it’s possible to time your stock and share purchases as well as you possibly can.