Buy low, sell high. A lot of traders say it, and it is not necessarily true.
Momentum in trading usually continues. If price is going higher, more often than not it keeps going higher, which makes the saying inaccurate.
Key takeaways
Between seventy and ninety percent of traders fail, so if you do what most traders do, you are likely to fail too.
There is no set minimum or maximum price for an asset, so buying low does not really apply in the market.
Find who has the momentum, the buyers or the sellers, and join the winning team instead of fighting the move.
Candlesticks, wicks and volume are not just patterns; they show you what the buyers and sellers are actually doing.
When momentum starts losing strength, shown by falling volume as price climbs, that is your signal to leave the position.
Why buy low, sell high does not hold up
There is no maximum price for an asset going up and no minimum for one going down. So there is no real low to buy.
When price is going lower, following the momentum often means you should sell, not buy. That is the opposite of the saying.
You have to double check these popular sayings, because a lot of the time they are not true and they will not work in your favor. Remember, the minority are the ones succeeding.
“There is no low. Buying low is not necessarily true, because there is no low.”
The oil trade that taught me this
During the COVID pandemic I was trading oil while it dropped massively. I kept buying as it fell, thinking, how much can this drop.
I deposited everything I had, then took cash out of the bank and deposited that too, all into the trade. Price reached around zero and I thought it had to go back up.
Instead it went negative, down to around negative ten, something I had never seen before. That is the reality. There is no low to buy.
Join the winning team
Our job is to see who the momentum is with, the buyers or the sellers, and join them. If sellers are winning and pushing price lower, we sell with them.
There is no discount in trading. It is an asset, so there is no cheap price or expensive price, only the direction investors are moving it.
We read candlesticks, wicks and volume to see who has strength and how long they hold it. If price keeps rising but volume fades, the buyers are losing power and it is time to think about getting out.
“As traders we join the momentum, then leave when it loses its strength.”
Trade with the momentum on capital from a firm you trust, and compare the options side by side on Propvator.