Sunday, November 1, 2009

Picking a top or bottom

Many traders try to predict a top or a bottom, but reality reveals this to be a futile attempt and one which mostly ends with considerable losses.

If you try to buy at the bottom, then most often prices will drop yet even further or the stock will trade sideways which automatically means dead money for a long time.

If you attempt to predict a top then there is always the possibility that you are wrong and the high you had imagined is in fact the low of an ongoing rally to much higher prices.

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