Trading Fact: A "Buy Low Sell High" Investment Strategy Will Lose Money Longer Term!

The investment strategy followed by the majority of investors "buy low sell high" will lose money for those investors who follow it. Let’s look at the facts and you will see why it fails over the longer term and discover a better way to trade.

Buying low you can’t do it! Why? Quite simply, it involves predicting the market and not reacting to price strength. In hindsight charts prove it simply does not work. Traders like to buy low on a dip to support, but how often does support fail? The answer is most of the time.

Most traders are so keen to buy low they keep buying into support and then get stopped out. They then lose their equity after a number of trades, as the odds simply are not in their favor when they try this and loses eventually see them wipe out their account equity.

Buy low sell high, is only a good strategy if you have hindsight and can see what happened on the charts and you don’t have the benefit of this when you enter the trade.

We have all heard of the predictive theories of Gann and Elliot, but if they worked and we all knew where prices were going in advance, there would be no market.

The price would simply be known to all traders and their would be no market. Leave the above theories to the far out investment crowd and the dreamers and base your strategy on the reality of how and why markets really move.

Back to basics

So what should a trader do?

The answer is revealed in the well known phrase "a trend in motion is more likely to continue than reverse".

When do the odds most favour this?

The answer is when prices break to new highs and a trend in motion accelerates at a rapid rate from a new price high. Look at any currency chart and you will see the biggest price moves normally take place from important market highs with NO pullback.

FACT: A "buy low sell high" strategy will see traders miss the majority of major moves.

Traders who wait to buy low never get in to the trade and miss the trend, as the price accelerates away from them and never looks back. These traders therefore never get a chance to enter the trade.

The secret to buying a market and catching the big profitable moves is "buy high and sell higher", accept the wisdom of this phrase and you will be in on all the major trends.

It’s hard to buy a trend in motion.

The reality is the odds favour that a trend in motion will continue and when a market has broken out to new highs, the odds of a continuation of the trend are at there highest.

Know one likes to miss the start of the move but if we trade this way we can get in on all the major moves.

Which method is best?

Use important breaks of resistance, time entry with momentum indicators such as the stochastic indicator, and be selective with your trades to catch the big moves.

Or:

Try a strategy that involves "buying low and selling high", get stopped out frequently and watch all the major moves take off from new market highs.

Easy choice really!

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