Selling into Strength and Buying into Weakness
Both selling into strength and buying into weakness are standard trading practices, widely followed by traders of all kinds. They are proactive trading strategies which are opposite to one another. In both selling into strength and buying into weakness the trader reacts to the market before confirmation of a change.
Selling into strength is the strategy of shorting a position when price of the trading instrument is still going up. Traders do this when the price trend is expected to reverse in the near future. There is no downside risk with this strategy. Selling before confirmation of trend reversal preserves a trader’s profit. This is a good strategy as there is also no guarantee that he/she can short his/her position for a profit after confirmation of trend reversal.
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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Selling into strength is the strategy of shorting a position when price of the trading instrument is still going up. Traders do this when the price trend is expected to reverse in the near future. There is no downside risk with this strategy. Selling before confirmation of trend reversal preserves a trader’s profit. This is a good strategy as there is also no guarantee that he/she can short his/her position for a profit after confirmation of trend reversal.
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.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
8:41 AM
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