Why the Market Goes Down When You Buy High and Up When You Buy Low

New investors in cryptocurrency and stock markets often observe a frustrating trend: when they buy at a high, the market goes down; and when they buy at a low, the market goes up. Understanding why this happens involves several key factors.

First, market volatility. Markets are inherently volatile, with prices constantly fluctuating. This volatility can easily mislead investors. When an asset reaches its peak price, many investors rush in, causing the market to become overvalued. Subsequently, prices tend to drop.

Second, psychology of fear and greed**. Many investors react emotionally to market movements. When prices rise, they experience FOMO (fear of missing out) and buy in, often at peak prices. Conversely, when prices drop, they panic and sell, driving prices down further.

Third,influence of professional traders. Large institutions and professional investors have a significant impact on the market. They tend to buy low and sell high, but their activities aren't always transparent to average investors. When professionals sell at high prices, it can trigger a market decline, just as their buying can cause prices to rise when they invest at lower levels.

Therefore, understanding this trend and maintaining emotional discipline is crucial. Learning to conduct both fundamental and technical analysis will help you make informed decisions rather than emotional ones. By doing so, you can take advantage of market movements and protect yourself from potential losses. #AlphaRules