Lower Lows and Higher Highs
One aspect of technical analysis trading that can be especially confusing for newcomers is the dual notion that it is a better idea to trade with the trend (not against it), while at the same time “buying low and selling high.” Of course, anyone with a proper understanding of these two trading practices can tell you that these two concepts are fundamentally at odds with one another: If you are trading in an uptrend you have - by definition - already missed the lows and therefore cannot buy into them. The reverse would be true for traders looking to sell downtrends. So, it would seem that there is no way to do both, and that traders must find one strategy that works best for their temperament, abilities, and time availability. But is that entirely true? Is there no way to find a happy medium and play off of some of the strengths of both of these time-tested market maxims?
One aspect of technical analysis trading that can be especially confusing for newcomers is the dual notion that it is a better idea to trade with the trend (not against it), while at the same time “buying low and selling high.” Of course, anyone with a proper understanding of these two trading practices can tell you that these two concepts are fundamentally at odds with one another: If you are trading in an uptrend you have - by definition - already missed the lows and therefore cannot buy into them. The reverse would be true for traders looking to sell downtrends. So, it would seem that there is no way to do both, and that traders must find one strategy that works best for their temperament, abilities, and time availability. But is that entirely true? Is there no way to find a happy medium and play off of some of the strengths of both of these time-tested market maxims?