Friday, August 5, 2011

Buy when base building starts

When markets fall sharply and dramatically, the desire to buy comes out strongly. But, this is not a good idea. Traders and Investors cannot buy randomly. There must be a method behind taking any trade.

Once markets show signs of entering into a bear trend, as our market is now doing, then buying should wait till the decline ends. How do we know that markets have stopped falling? The only way is to wait for base building. This process requires markets to go into a range after a significant decline. When prices break above range resistance, the first signs of buying will emerge.

1 comment:

daytrader said...

dear sir,welcome back ,will u pls discuss some exit strategy for day traders who trades on 3min -5min charts ,bcz normaly profit positions turn to loss due to not having exact exit plan
thnx and regards
ur follower