200 Day Moving Average
200 DMA Defined: "What is the the 200 dma?"200 DMA Definition
The 200 dma or 200 day moving average is one of the most important indicators available to many longer term investors. The 200 dma can be used to assist investor decisions for the stock market, individual stocks, oil, gold or other tradeable securities
- 200 DMA is used by investors to signal for changes in direction of stock markets, individual stocks, oil, gold or other tradeable securities
- 200 dma or 200 Day Moving Average represents a longer term view of the trend of a tradeable security
- Stock Market investors could have avoided major losses by following the 200 dma during major stock market crashes of 1929 and the stock market crash of 1987 and many other stock market crashes
- 200 dma is considered technical analysis
- Stock Market Technicians use tools like the 200 dma to help them decide whether they should invest in individual stocks, gold, oil or other tradeable commodities
200 DMA, Why is the 200 DMA important?200 DMA, Why is the 200 DMA Important?
The 200 dma or 200 day moving average has proved to be a successful tool to avoid long term losses in the stock market. Investors using a technique of selling out of stock portfolios when the major stock market index moves below the 200 dma or 200 day moving average would have avoided major losses in the past bear markets.
For example, the of the Nasdaq Stock Market Index chart on the right shows that investors selling when trading drops below the 200 day moving average beginning in September 2000 would avoid avoiding 24 more months of agonizing losses.
- Investors use technical indicators like the 200 dma as a trade signal
- Nasdaq is a popular Stock Market Exchange
- The Nasdaq Composite is a index that generalizes the prices of approximately 4000 individual stocks traded on the Nasdaq Exchange