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Buying Low - Selling High
By Tom Long | July 17, 2007
I know it’s a little strange to write under a headline called Buying Low - Selling High when my section is “Don’t Trade Like This” but hear me out.
Currencies trend and we should always take advantage of this. Therefore instead of trying to buy low and sell high you should aim to buy high and sell higher. In the other direction you should sell low and buy back lower. That the price is high simply means that there are a lot of buyers right now and you want to be on the same side as they are, not on the opposite. Take the last few months of price action in the CAD/JPY as an example. This pair has rallied more than 1500 pips in the last 4 months and it has given you plenty of time to buy but still so many are hesitant to buy something that has already gone up for a while. After 1000 pips it just seems so expensive and you are lured to sell high and buy back low when you instead could have bought like everybody else was doing and be up another 600 pips by now. The same goes for the EUR/JPY that has rallied over 3000 pips in the last few months. It broke the big figures as if they didn’t even exist; 140, 150, 160… and now we’re close to 170.
So I can only urge you to not see current prices as the max we’ll see in any of the pairs that have been trending lately (which are most USD and JPY pairs). If prices are pushed up it means that everybody is buying and that’s what you want to do too.
Tags: dollar, forex, forex news, forex trading
Topics: Don't Trade Like This |