You only know its a top in hindsight. The bears who sold the Naz at 2.5k in 1999 thought they got a really good deal, but guess what? It doubled a year later.
not everxone buys or sells at important levels in the markets. i think mr. buffett dont look for levels.
Same goes for a bottom. It is always hinddight. Key is setting risk, knowing the edge of ur system and trading it with no emotion. Easy to ssy hard to do.
That's what trading is all about indeed. When a trader buys at a certain price, he is in fact only hoping to find another sucker who would buy from him at an even higher price, before the "music" (uptrend) stops. PS: The Australian dollar is on fire tonight, check it out...
What is the probability that SPY visits the 172 area before the end of this week? Back to the theme of the thread, would it be useful in one were to think in terms of types of demand such as discretionary buying vs. forced/mandatory buying?
The reasons why people buy "at a top" (there were already multiple comments on hindsight bias) are as diverse as there are market participants. Some smart traders buy at the top because they've made a killing taking long trades over an extended period of time (and other, not so smart traders were missing out because they tried to predict a top). At some point in time, these long trades don't work anymore (market eventually topped). As they are smart, they cut their losses quickly⦠and if they are extremely smart, they start riding the wave down with short trades...
================== T journal . Well if you study all data as much as 60-72 hours a week, 6 days a week,trends-bear trends bull trends , sideways slop- trends; same reason some sell bottoms,is that TREND =Friend/profit. Frankly TRENDS have made so much more money than countertrends, you may want to study that, or you may not Please dont confuse a top with ''the top,'' that known only in hindsight Good question; wisdom is profitable to direct. ------------------------------------------------------------ Ps this uptrend SPY.. is a real,, real old uptrend; too bad for the bulls, could go higher, NOV usually is bullish, according to 20001 Stock traders Almanac
people buy tops because those are suckers! they missed a big run, then jump on the top expect big run again. suckers do not know the basic principles in the market: buy low and sell high over and over, suckers buy top, or those suckers listen to wall street's propergeda. I like to buy dips or support, I donot like to buy over extended rally. just ignore wall street's bla... use your own mind. in whatever situation, buy low and sell high works. when in a dropping market, buy low does not hurt, sell on greenbar, very productive, just donot hold. in a popping market, buy redbars yield great return. suckers sell obvious extended down trend suckers buy obvious extended up trend they end up buy high and sell low, they are the 90% catergories
each rally is just an bubble at some level, the bubble "po", you will find yourself so dumb to buy so high I know one of my friend who bought YHOO at $250, he tried to be smart in .com bubble, he still had his shares, each time when he mentioened his $250 yhoo purchase, he feel he is a dumb he said he want to holdit forever, remind him always: the risk is so great when he buys HIGH/TOP when look around, everyone is making money, then watch out, the down side is there, the odd to buy exact top greatly increased donot be a sucker! be a cold minded trader/investor, that is the only wise thing to do!