Buy On Weakness – Sell On Strength

For those of us already “in the trade” – congratulations. One of the most difficult things for a new trader to learn to do ( and also one… essential for success) is to “buy into weakness” – and “sell into strength”. I know it  sounds crazy, if not completely insane to the newcomer but…you gotta get your head wrapped around it in order to succeed. You gotta think like the big boys.

For most (wary of the current market conditions – and perhaps angry, frustrated – or even half clean out by the 2008 crash etc) its is extremely difficult to trade / invest when….for the most part it’s a crap shoot at best. Day to-day news of collapse…or war….or you name it really – has really taken a bit out of the average investors confidence in the market.

So…you see a big “up day” and you think “hey things are turning…I think Im gonna buy” – or the inverse “oooh – red day….I better sit tight and see how this plays out” – then oddly…….get smoked doing either! The buyer on green…..wakes up the following morning to a sea of red…a losing position…. and a broken heart. The “sitter” on red….wakes up the next morning to “Dow up 300!” – stocks through the roof, and an angry wife saying “well  then!  – why didn’t you buy? – damn!”.

In general, lets look at it this way. On “green days” wallstreet fat  cats with more money and stock than god are SELLING YOU STOCK ( as grandma and grandpa hear of the euphoria..and assume the time is right ). The wallstreet gang already owns the stock – at much lower prices – and sees this opportunity to SELL – as new participants enter the market with dreams of their own private island.On “red days” wallstreet fat cat with more money than god are BUYING YOUR STOCK – as newbies completely freak out – sell like there’s no tomorrow, and again turn to face the wrath of their “oh so loving wives” with a loss….. from the trade they “so confidently” placed days earlier.

Anyway….I could go on.Point being – in order to play with the big boys – you gotta flip this thing upside down -you gotta buy on weakness….and in turn….sell on strength.

Short of that – I can only imagine – there’s whole lot of pissed off wives out there – continually hearing of “trades gone wrong” from  “mr. know it all” sitting ‘cross the kitchen table. Thankfully – Im still single.