A Strategy For The Buy Low, Sell High Mantra

“Buy low, sell high!” Bada-bing, bada-boom, and the money rolls in. If only it were that simple, we’d all be rich fairly quickly. However, after looking past the myths, there are strategies that can help in determining a bottom or a top, and one of them is to look for reversals.

Gold and silver both reversed yesterday (Jan. 11), which might seem bullish at first sight, but it isn’t.

Reversals are the key moments in any market because they often mark tops and bottoms. And – of course – everyone wants to buy at the bottom and sell at the top. That’s much easier said than done though because tops form exactly at the moment when the urge to buy is at its peak, and the opposite is true for bottoms. So, in order to make money, one needs to decide on not following what they “feel” is going to happen, but what the objective tools that have proven effective in the past suggest. If enough of them suggest the same thing, the odds are that the market is going to do something – regardless of how one “feels” about the market at a given time.

Reversals are particularly interesting because they allow one to enter the market almost right at the bottom and exit right at the top. And they work over and over again. They’re easy to spot too – the price was going up for days and now it moved up and then back down. Easy as that… Or is it?

You already know the answer. No, it’s not that easy. It may look simple, especially at first glance, but it’s not easy, and the emotional factors are not the only obstacle in determining whether or not a reversal was really important.

The thing about reversals that’s hidden in plain sight is that they are not only about the price. The key thing to look for during these reversals is volume.

We should see a fierce battle between bulls and bears, leaving one side overpowered – in the case of bottoms, bulls should overpower bears. Low or average volume means that the battle was not fierce, or that there was very little fighting done on a given day. The implications would likely be nonexistent.

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Disclaimer: All essays, research, and information found on the Website represent the analyses and opinions of Mr. Radomski and Sunshine Profits' associates only. As such, it may prove wrong ...

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