How many times did you hear to be successful trader all you
need to do is “Buy Low and Sell High”? I heard it thousands of times. Unfortunately,
this phrase misses few important words. Let me give you an example on below chart.
When you ask ordinarily person or a new trader where is the low and where is the
high? Close to 99.9% will say Point 1 is the low and Point 2 is the high and
they will be right except one small key word. Point 1 is past low and Point 2
is past high. Unfortunately, when you trade and invest you do it in a future and not in the past.
Let’s look at the chart below which looks at the same data as above but few weeks forward. It turns out Point 2 was past high but it is at the same time is future low. So next time people say “Buy low, sell high” they mean “Buy at the price that will be future low, sell at the price that will be future high” or “Buy future low, sell future high”