Unlocking the Art of Buying and Selling:
Regardless of the market - be it stocks, forex, or commodities - the key to successful trading lies in a profound understanding of the buying and selling process. It's not just about the markets themselves, but rather the discipline and patience required to execute trades effectively.
To master this craft, one must develop the ability to monitor markets with persistence and wait for the optimal moment to act. This requires a deep understanding of market dynamics, coupled with the emotional intelligence to remain patient and focused.
In this discussion, I'll share valuable insights on how to cultivate the skills necessary for successful buying and selling, helping you navigate any market with confidence and precision.
In the illustration above, I've highlighted the key things you need to look for to identify a potential buy trade (these same rules apply to sell trades too). Before you consider a trade a buying opportunity, you need to make sure there's a reference move in place. Without one, the trade won't work because it lacks the momentum needed to move the price. So, finding a reference move is a crucial step in figuring out if a trade is worth considering.
Next, remember to never buy at the peak of a market trend, even if you missed out on the initial excitement. As traders and investors, our goal is to make smart moves at the right time to maximize our profits. We shouldn't just hold onto assets forever, hoping they'll eventually go up in value. Instead, we need to be strategic and take advantage of opportunities when they arise. Holding onto assets for too long can lead to big losses, and we've seen plenty of examples of cryptocurrencies plummeting in value or disappearing completely. So, it's key to focus on getting in and out of trades at the right time, rather than just holding on..
The third step is to keep a close eye on the market when it seems like it's ending a discount phase and making a slightly lower low. But here's the thing: this step only works if there's a valid reference move in place. If there's no reference move, don't bother trying to spot this pattern, because you might end up with false signals and be disappointed. Instead, take things one step at a time, in a logical order, and make sure you have a valid reference move before moving on.
The fourth step is to stay patient even when you think you're about to get rewarded. Don't act too quickly, though - you need to wait for confirmation that the reference move is really back.
When it returns, it will give you a sign, like an equal low/high or a double bottom/high pattern. But here's the thing: not all of these patterns are created equal. You need to understand what makes one valid and another not.
So, keep this in mind: not every signal is trustworthy, and you need to be careful not to make a move based on a false one.
The final phase is when you see your equal bottom pay off, as the market price bounces back after hitting equal lows - what we call an 'A' formation. Now it's time to get ready! Watch closely for a sign that the downward trend is losing steam. This could be a Doji, a bullish Pin-Bar, a Hammer, or any other candle pattern that shows sellers are losing their grip. When you see this sign, it's time to make your move and enter a buy trade. If you time it right, you won't see any drawdown at all.
I hope this lesson helps you make profitable trades and takes the confusion out of the market for you. Good luck, and all the best!
Best Regards