Wednesday, February 3, 2010

Buy low sell high principal - Swing trading methods

If anyone is going to adopt the swing trading methods he or she must understand the very basic principle of it that is "Buy Low and Sell High". This is very simple yet it is ignored by many novice traders especially those who like to scalp the market.

Low and High happens in any market patterns whether it is uptrend, downtrend, or sideways. This is because the market move in stages, its not like one time shoot and reach certain target at once. In uptrend for example after reaching certain resistant level (usually mark by previous movement) it will make correction or retracement to put the market movement in its normal average point. So the market will move down for a while before moving further up to reach the new resistant level. So in order not to get caught in the correction movement try not buy at the new high, but after the correction.

Likewise in downtrend the market will retrace after reaching certain support level before making continuation further downwards. In order not to get caught in the correction, try not to be sell further when the market reaching a new low

On the sideways trend it is very obvious, the market will fluctuate within identical support resistant area. So in this case buy low and sell high principle is much easier to notice compare to uptrend and downtrend. In this case simply Buy Low and Sell High.

This is a great and simple principle of swing trading.

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