Buying on the way down, selling on the way up

Discussion in 'Strategy Development' started by Matt8200, Jan 11, 2006.

  1. Does anyone else buy on the way down and sell on the way up? It seems like everything you read is focused on buying on the way up and then waiting to get stopped out for either a profit or loss. I have not found these systems to be profitable.
  2. Bowgett


    You can buy on the way down but be VERY carful. You should know very well what you are doing and what your plan is.
  3. EnzoF


    Yes, with emini contracts I scale in as it moves away from my price target, lowering/raising avg. cost basis. But like Bowgett says, I am prepared if it goes against me.

    With this particular method, I am looking for small moves, and it ends up being a high probability win rate. However, when a trade goes against me, it is often more than a few single gains. It just happens at a low enough percentage rate to make the system work for me.

    I agree with Bowgett though, got to be careful doing this. I go no where near what could be potentially very dangerous position size wise. Just little base hits, trying to get a lot of them.
  4. Certainly.
    You make the most money that way.
    As will all methods, you only have to know when.

    Hope this helps
  5. logikos


    If market conditions stayed the same for more than one day in a row, I'd be rich by now. One day I can make a mint buying breakouts up or down, the next day they are all false and I have to change my strategy or get burned. You just have to be flexible enough to adapt quickly.

    Buying on the way down is a great strategy if the stock is nearing some long term support point that will bring in other buying interest. Selling on the way up, at least in a bull market, is way too dangerous. The same for buying on the way down in a bear market.
  6. gbos


    This strategy works well for stocks though you must know what you are buying and also diversify a little.
  7. K-Rock


    I trade this way and to date it's working well for me. In order to mitigate risk (being on the wrong side of a strong trend) I look to higher timeframes for clues/direction.
  8. ===========
    Yes, strong stock , in a strong sector, have bought before complete confirmation ,near a 50 day moving avereage.

    Its more risky/rewarding, dont do it as much, another reason a strong stock will spend much time above/not near 50ma.

    In another big/long term sense if you buy on a pullback/down ;
    or ever sell to close a position in a bull market, you have sold on the way up:cool:
  9. I have backtested my strategy with more than 10 years of data and I use options to limit my risk. I don't like stops and I don't use them.
  10. #10     Jan 11, 2006