bagsby32
23 posts
msg #100274
- Ignore bagsby32 |
4/16/2011 1:08:44 AM
What does "buying into weakness" mean? Any examples would be helpful.
Thanks.
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four
5,087 posts
msg #100276
- Ignore four
modified |
4/16/2011 7:24:03 AM
http://blog.nobletrading.com/2008/07/selling-into-strength-and-buying-into.html
"Buying into weakness is the strategy of buying into a long position when prices of the trading instrument are still falling. Traders do this when the price trend is expected to reverse in near future. With buy weakness strategy there is always downside risk of loss if the price reversal does not occur. This is a good strategy for experienced traders who use effective technical and fundamental analysis tools to evaluate and predict price trends."
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Hypothetical Example,
Averaging down...
Each time a stock drops by > 1.5% = buy more.
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miketranz
961 posts
msg #100283
- Ignore miketranz |
4/16/2011 5:08:34 PM
"Buying into weakness" basically means buying into falling prices.The only problem with this method is you really don't know just how far prices will fall.There's an old expression "Don't try to catch a falling knife".Picking a good entry point ,only after prices reverse,is a safer bet.There are a few "pullback filters" set up for this method.What you are looking to do is buy into some form of upward trend resumption,after a sell off,which is basically momentum trading.Remember,trading is gambling,risk taking,don't let anyone tell you it's anything other than that.So try to put the odds in your favor,wait for a good reversal entry point,pull the trigger,use a tight stop loss coupled with money management,good luck....
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Kevin_in_GA
4,599 posts
msg #100287
- Ignore Kevin_in_GA |
4/16/2011 7:05:17 PM
Miketranz is right - this is a profitable system if you are cautious and use good money management.
One strategy is to look for stocks that are in a longer-term uptrend but have pulled back recently - look for stocks at or below their lower Bollinger band as one example. Use a stop based on 1 more SD below your entry.
Just my thinking on how I might implement this. Feel free to modify as you see fit, and good luck.
Kevin
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marine2
963 posts
msg #100291
- Ignore marine2 |
4/16/2011 11:59:35 PM
Choose financially / fundamentally strong companies, priced higher than $10, that are experiencing a price reduction to their stock. Buying this type of company, at the right time, assures you, you are buying quality. A very high percentage of the time these quality companies will need to rest, take a gulp of fresh air to once again rise. The old saying, they pause to refresh, is applicable in this situation. Never ignore to look at quality companies that see their stock prices falling. The strong companies rise again, fall again, rise again and fall again in regularity. Catch the bounces and smile all the way to the bank. Happy investing!
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