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Buy Low, Sell High

Knowing When to Buy And Sell

This may seem an obvious statement but many investors either don't know when to buy, or grow impatient waiting for the right time to buy. In a booming market the risk is buying into the market just as the market tops out and you lose money as your asset goes down in value. Then the investor has to wait for the next upturn. This is of no consequence if the investor holds the asset over many market cycles if the long term trend has always been an increase in asset value.

Learn The Market Cycles

It pays to research the market and view historical charts. This can be sourced from numerous locations like:

Be sure you understand the patterns and consult an expert in the field to confirm your assumptions.

Be Patient When Trading

Wait for the market to go through a low demand, high supply cycle. Low demand and high supply keeps prices low as there are not enough customers for the assets on sale. This is known as a buyer’s market and those buyers may be able to bargain the price down further.

As the market enters its boom cycle monitor it for signs of it topping out. Firstly has it risen enough to meet your exit criteria? If so then sell. Signs that a market has topped out are slowing demand (less sales), increasing supply (more on the market), stalling price growth and/or bleak/negative market news. It will take a while to learn it intuitively.

Beware of Market Hype

There's another thing to consider, an old saying - 'If everyone is buying in, it is time to get out of the market'. Basically this means the market is overheated with too much supply.