How Jim Cramer Chooses The Best Entry And Exit Points On A Stock

Love him or hate him, CNBC's Jim Cramer is an eccentric personality who seems to have infinite wisdom and knowledge of the stock market and public companies.

Naturally, not all of Cramer's top picks turn out to be profitable, but his logic behind stock selection is commendable. During Thursday's edition of his daily "Mad Money" show, Cramer offered some tips and tricks for finding the best entry and exit points when investing in stocks.

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"When you pick individual stocks you are betting from the moment you buy them that they are going to go higher," Cramer said. "I know — it's a pretty simple concept but how often do you do solid fundamental work on a company?"

Cramer is a firm believer in technical analysis; that is, checking the charts. When a "chartist," or technical analyst pro, sees the volume of a stock has increased at a time when the stock hasn't gone down, it may serve as a sign that the stock has established a floor price and it is now safe to buy.

Technical analyst experts also make use of a statistic known as the moving average, which is calculated by taking the closing price of a stock over a period of time, adding it all together and then dividing the figure by the number of days in the measured period.