Buy Low Sell High Forex
“Buy low, sell high.” Everyone’s heard it before. Seems like everyone is trying to do it. That should be red flag #1. As a profitable trader, you aren’t supposed to be doing what everyone else is doing. And for good reason.
Everyone knows that if you buy low and sell high, you’ll make money. Fine. What about, buy high and buy higher? Yes, ladies and gentlemen, I am asking you to step outside of the box for one moment and think about this. When you are looking for that great bargain stock that you think is undervalued, did you ever think to yourself that there’s no way that this forex pair is going to go any lower and therefore it’s got to be a good buy at these prices? Think again.
When a Forex pair price has been depressed, there’s a very simple reason for this. More shares are being sold than being bought. And, more often than not, that pair is going to continue to drop. Conversely, a pair that is near highs (intraday or 52-week) is highly likely to go higher. Doesn’t that make sense? How many times have you caught yourself in this situation? Buying “a bargain” and having the bottom fall right out from under your feet, just when you thought it couldn’t go any lower?
Implication #1: You should be buying pair that are near highs.
Implication #2: You should be short selling pair that are near lows.
Implication #3: Stop trying to call the “tops” and “bottoms” and go with a sure bet instead. As cliché as it sounds, the trend is your friend.
Please note that you can apply this very simple idea to just about any time frame, long or short. If you’re a long-term investor, look at long term/intermediate highs and lows. If you’re a day trader, look at intraday highs and lows as well as long term highs/lows.
I guarantee that following this rule alone will greatly increase your chance of making money on your next trade.
