The trader’s fallacy: “Buy low, sell high”

Whenever I hear people talking about how they would trade if they had the chance, one sentence remains prevalent in all the conversations I’ve seen.

“Buy low, sell high.”

The problem with that is, what exactly is low? Oil at $70 could have been construed as low, and I seriously thought that that was it’s bottom. But look what happened. Right now, oil is trading at $51.69 a barrel. If you were CFD trading, you would’ve been cleaned out in an instant, especially if you were silly and put 10% of your total deposit as margin like me.

We still don’t even know what “high” could be taken as. Even with my limited trading experience, I know as well as anyone that sinking feeling when you’ve sold a stock and it’s value goes up after that. It’s the equivalent of throwing money down the drain, although, with trading, you don’t know you’ve done it until you’ve pressed the “Sell” button (or the “Short” if you’ve used Plus500.)

Put simply, the problem is that this might just be the most generic statement relating to trading that I’ve ever seen. It’s all well and good to say this, right up until you’re in front of a computer screen.

2 Comments Add yours

  1. Justin says:

    “It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.” – William O’Neil

    Like

    1. The eternal conundrum… 😦

      Like

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