The truth about Buy at the bottom & sell at the topHello,
If you're here, you've likely encountered the timeless advice of "buying at the bottom and selling at the top " is an advice you must have heard by now. However, executing this is one of the most difficult things for most people to do. This is majorly because most people cannot tell where the stock is at during any particular point in time.
Fundamentals will tell you the estimated valuation of a stock, what the company does as a core business activity, where it derives its revenues, where it burns most of its cash and all other metrics including the cashflow situations.
However, the stock market chart is very key in your valuation and price entry journey. The historical price chart would tell you the lowest and highest points a stock reached during a certain time period. Noting these key points can greatly amplify your results and giving you an edge against other traders.
Notice how the current price of our chart IBM is nearing its highest point in a decade, suggesting it's not an opportune time for purchases. This is because structure can change once we get to the top and room for making a proper reward against risk is much limited. Investors who bought at the bottom in 2020 will begin liquidating their position which might result in stock prices coming down.
For the chart I will be keeping a keen eye at the top to see how price would react.
This can be shown over & over in many other charts to help investors with entry points.
Goodluck & please feel free to share your comments.
