Jones made most of his money with technical analysis, which <br />relies on historical patterns in price and volume data in the belief they have some predictive value. A simple technique that Jones uses is called a moving average, which averages a stock’s data over different time periods and has the benefit of smoothing out erratic data. A stock trading above its moving average is considered bullish, while a stock trading below its moving average is considered bearish. <br />>> Jones uses the 200-day moving average of closing prices. By <br />keeping an eye on the 200-day moving average, an investor can <br />sell quickly if the trend is down. Jones advises never averaging <br />losers. In other words, if a position starts losing money, either sell <br />or wait for the trade to be profitable before adding more capital.
