Buy Low, sell high

Discussion in 'Strategy Development' started by fire, Jul 15, 2009.

  1. fire


    hi there !!

    I dunno if this strategy works out or not..

    but many say that we need to buy when its low and sell when its high..

    is it definitely applicable to stocks and forex?
  2. randy33


    It works if you know what low is ?

    If stock X is at 10.00 and has been trending $8,$9, now $10 based on good earning news that just came out. Is $10 the new low, the base on which you see it go to $12 or $13 ?

    Was $8 the low, but you are buying against the uncertainty of downside risk should earnings come out different.

    By this argument $10 is the new low because it is a fair price on which uncertainty has been removed when good earnings came out. But then you see people sell on the news, soon $10 you paid will get cheaper back to $9 and you wonder what happened ?

    Should you then hang on to the $10 stock which is trading at $9 know it is a good stock affirmed by good earnings and outlook. Then the market turns and good and bad stocks get degraded likewise. Now you want to do yoga instead.