I'm reading a book that states the following Buy High - Sell Low Probably the most interesting rule for successful trading is to “Buy High and Exit Higher, and Sell Low and Exit Lower.” This is counter-intuitive to what we all have a natural inclination to do, which is buy low, sell high. Most great trading strategies are counter-intuitive. They are not based on our normal human nature and the normal human reaction to the markets. They consistently make money because they are designed with market sense not human common sense. In the final analysis, any market is just a collection of individuals making decisions and placing money in the market based on these decisions. Most of these individuals are doing what comes naturally to humans, buying low and selling high. Statistics show that 95% of these people lose money. To be a successful trader, you have to do the opposite of what this 95% is doing. It isn’t easy, because it goes against your human nature. But any strategy that is successful over time will most likely follow the rule of “Buy High, Exit Long Higher and Sell Low, Exit Short Lower.” Currently I always buy low to try sell higher. I have considered entering an up trending security but I always think that securities that have been growing a lot may more easily than others have retracements or reversals just as vast, nt
It all depends how you trade...I try to catch reversals early, but the bulk of my profits is reversals that turn into breakouts / breakdowns, and building in while they're breaking to new highs / lows. So, I'll have a very small position early which will give about coin-flip odds, but then I build in pretty big when it starts going my way. The problem is believing you bought the bottom is something quickly and frequently disproved, so you're likely to take losses as it initially goes against you. You won't be predisposed to this feeling if you're buying high because you already think you're paying a high price for something.
So basically the author of that book is saying to fight the trend. Wonder how it has worked out for him on the short side this past decade.
How is "Buy High and Exit Higher, and Sell Low and Exit Lower.” fighting the trend? Sounds like the author is suggesting you go WITH a trend.
Buy high after breakout and sell higher. Or Buy low and sell higher. I never like buy high after breakout and sell higher. It simply means you are unable to detect an earlier signal. It simply means you missed an earlier signal due to lack of concentration or whatever and are waiting for next (more dangerous) opportunity. It simply means you are waiting for all planets to be aligned before entering. It simply means you lacked confidence to enter early, and are waiting for confirmation, double confirmation, triple confirmation. By the time you have lots of positive confirmation and you enter, too late !! You suffer losses because there is no more momentum. Anyway pick and choose which ever works for you.
Your comment is just hideous, especially to all who trade Purina stock. They do not skin cats to make cat food, man. LOL! (Sorry, feeling tired and dopey).
if trading were only this easy. check my 'trading is easy' thread. you need a story, a context. if you can put the puzzle pieces together, the picture will tell you where the market is going... the 'story telling' ability is what makes a trader.