The Buy Low and Sell High System, the best way to make money | Forex Factory

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The Buy Low and Sell High System, the best way to make money

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  • #1
  • First Post: Nov 21, 2014 1:04am Nov 21, 2014 1:04am
We all tried many things, moving averages, trends, fibonacci, macd, cci, martiangle, pyramiding.
We've read books, some of us have attended courses, tried and (for some) coded countless EAs.

We have studied the geopolitical macro economic fundamentals of countries, tried to decipher what's going on on the mind of central banks, followed monetary decisions.

Yet, making money seems to remain as complicated as ever, the market once again fooled ourselves and went inexplicably in the opposite direction.
Most of the time it seems that the market act in such a mysterious and meaningless way, that we start questioning the meaning of all the facts we once thought was relevant to forecast the future market direction.

This is a rigged game, and in a rigged game nothing is like it seems, and nothing make 100% sense.

So i want to go back to the basis of making money in trading, and let's acknowledge which are these basis:

You make money when you Buy Lower than you Sell, and you Sell Higher than you Buy.
In other words, what we have to do in order to make money is BUY LOW and SELL HIGH.

And this system is going to show you exactly how to do it, in a simple irrefutable way, again and again, without the need to look for indicators, fundamentals, economic news, central bank monetary policies, we don't need fibonacci, trendlines, astrology and time travels.

All we will need are naked charts, and remember, the more complex you make, the more difficult it get.

In the next few posts we will see some theoretical examples of the basic rules of the system, with some theoretical charts (handwritten, not real currency charts) in order to really understand where and when to buy and where and when to sell.
  • #2
  • Nov 21, 2014 1:08am Nov 21, 2014 1:08am
Quoting tunera
We all tried many things, moving averages, trends, fibonacci, macd, cci, martiangle, pyramiding. We've read books, some of us have attended courses, tried and (for some) coded countless EAs. We have studied the geopolitical macro economic fundamentals of countries, tried to decipher what's going on on the mind of central banks, followed monetary decisions. Yet, making money seems to remain as complicated as ever, the market once again fooled ourselves and went inexplicably in the opposite direction. Most of the time it seems that the market act...
Are you sure buying low and selling high is the ONLY way to make money? What about buying high and selling higher? How do you define low and high?
If you are good at something, never do it for free--Joker
  • #3
  • Nov 21, 2014 1:19am Nov 21, 2014 1:19am
Quoting jmn5611
{quote} Are you sure buying low and selling high is the ONLY way to make money? What about buying high and selling higher? How do you define low and high?
Yeah that's a good question, the only way to make money is buy lower then you sell, so if you buy high and sell higher you are still buying lower then you sell, you are still buying low compared to your sell.

However i see your point, like in a strong uptrend, you buy high and sell even higher, and this is a way to make money too.
I've tried such approach for years, but it don't work with me, buying high and selling low wasn't a good deal for me.

I know many "breakout" traders trade that way, it is really good if they can make money!
This system however is about buy low and sell high

As for your second question, "How do you define low and high", answering this question is what this system is all about, i will answer that soon!

Edit:
I've modified the thread title with "best way to make money" instead of "only", so we are all happy now!
  • #4
  • Nov 21, 2014 1:33am Nov 21, 2014 1:33am
thanks tunera,

looking forward to your further posting and explanation.
  • #5
  • Nov 21, 2014 1:58am Nov 21, 2014 1:58am
** Important ** :

Well, if you have read carefully and have understood deeply the first post, you have also understood why the best way to make money is by sticking to the main basic truth of make money in trading, and this truth is Buy Low, Sell High.

Your mind love complicated things, that is the only purpose of mind, to solve tricks and problems.
However, to make money is simple, and every time you make trading a complicated thing (with all the stuffs wrote in the first post) making money become complicated!

So don't listen your mind, don't listen when she say that you need something more complex, it is a LIE!

/////////////////////////

With this premise, let's move forward.

So, Buy Low, Sell High.
How do we know what is Low and High?
Low compared to what?

The answer, is Low compared to the future!
However, we don't know the future, if we would know we would use 200x leverage and make 1 billion in less than a month.

Luckily for us, neither other investors/banks/hedgefunds/traders know the future, all they know is the past, represented in charts, and that is what they/we all use to decide when and where is Low and when and where is High

So forget about the future, let's stick to the charts (past and present).
Same question again:
Low compared to what?

Compared to the past.

Below an image i've made, it's not a real chart, but merely a representation of one.
Can you spot where High is and Low is?
Attached Image (click to enlarge)
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  • #6
  • Nov 21, 2014 2:07am Nov 21, 2014 2:07am
Quoting tunera
You make money when you Buy Lower than you Sell, and you Sell Higher than you Buy. In other words, what we have to do in order to make money is BUY LOW and SELL HIGH.
Grossly exxagerated, glamorized theory, but unfortunately no grounds to reckon it as valid. What makes price "low" or "high" is some technical pattern or external fundamental or insider information or anything that allow you to assume that price is oversell and overbought.. And that's why you see tons of charts, conjectures, suggestions and all this sophisticated stuff you bored with
  • #7
  • Nov 21, 2014 2:09am Nov 21, 2014 2:09am
Quoting leebsurag
{quote} Grossly exxagerated, glamorized theory, but unfortunately no grounds to reckon it as valid. What makes price "low" or "high" is some technical pattern or external fundamental or insider information or anything that allow you to assume that price is oversell and overbought.. And that's why you see tons of charts, conjectures, suggestions and all this sophisticated stuff you bored with
I'm not sure that i understood your point but.. thank you
  • #8
  • Edited 2:27am Nov 21, 2014 2:15am | Edited 2:27am
Buy low / sell high is what works for me.

It's just me; I am a few peas short of a casserole.

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  • #9
  • Nov 21, 2014 2:21am Nov 21, 2014 2:21am
Thank you Mingary!

So, Low can be considered anything below a certain previous Low on the chart, and High can be considered anything above a certain previous High on the chart.

Below another image with some coloured arrows (the Red arrow is for sell, the Green arrow is for buy).

As you can see there is the Basic version of the concept and the Double version, in the real market there are doubles triples quadruples situations and these are the most beautiful ones!
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  • #10
  • Edited 9:15am Nov 21, 2014 2:39am | Edited 9:15am
The trend, Buy Low during a downtrend or Sell High during an uptrend can be very dangerous, that is why you must keep an eye on the trend (if there is any), and avoid go against it.

Said this, statistically 75% of the time the market is trendless, from time to time strong trend develop in one or more currencies, for example the xxx/jpy current uptrend, or the gbpusd current downtrend, the good sense is to just don't trade against a strong trend when there is one.

So how to trade the trends buying low and selling high?

The image below may show it (this is the last hypothetical image, from now on we'll see real charts examples).

Enjoy it!
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  • #11
  • Nov 21, 2014 2:40am Nov 21, 2014 2:40am
Quoting tunera
Thank you Mingary! So, Low can be considered anything below a certain previous Low on the chart, and High can be considered anything above a certain previous High on the chart. Below another image with some coloured arrows (the Red arrow is for sell, the Green arrow is for buy). As you can see there is the Basic version of the concept and the Double version, in the real market there are doubles triples quadruples situations and these are the most beautiful ones! {image}
Something like that yes.
But more importantly the points you mentioned can be trend continuation break outs. The herd loves them to "get in the trend"... invariably, they lose. So in theory when every joe and his cousin are buying, you are selling.
Of course the trick (if there is one ...) is to avoid the real trend continuation breakout (:
  • #12
  • Nov 21, 2014 2:45am Nov 21, 2014 2:45am
Dear tunera , Will You Give Some Example With MT4 Platform To Explain Your Thinking :-)
  • #13
  • Nov 21, 2014 2:54am Nov 21, 2014 2:54am
Quoting Mingary
{quote} Something like that yes. But more importantly the points you mentioned can be trend continuation break outs. The herd loves them to "get in the trend"... invariably, they lose. So in theory when every joe and his cousin are buying, you are selling. Of course the trick (if there is one ...) is to avoid the real trend continuation breakout (:
Yes that is why i don't like the idea of Buy High and Sell Low (as Jmn5611 has suggested), below an image of what can (and most of the time do) happen!

The Buy High approach was and is used mostly in the equity and stock markets, like the S&P500, markets that goes for years and years straight UP, even there the only successful traders (like Jesse Livermore) buy high and take their profits soon after in order to avoid to get catch by the reversal, many times however they do get catch by the reversal and lose big, and all of them lose their pants whenever the trend reverse.
In a way or another even in a strong trending market, buying high and selling low is a losing strategy in the long-term (you can be lucky a few times but not all the time), if then you consider that we as fx traders do use some level of leverage, well my friend buying high and selling low is the best way to burn your account.

NO NO NO NO!
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  • #14
  • Nov 21, 2014 3:05am Nov 21, 2014 3:05am
Quoting Mingary
{quote} Something like that yes. But more importantly the points you mentioned can be trend continuation break outs. The herd loves them to "get in the trend"... invariably, they lose. So in theory when every joe and his cousin are buying, you are selling. Of course the trick (if there is one ...) is to avoid the real trend continuation breakout (:
Yes you see in my "trend trading" example where i did write "Take profits here or let it run", that is we never know if when price get back to the Top/Bottom during a trend is going to continue in that direction (the trend continuation breakout) or is going to reverse from there, of course the safest strategy is to take the profits on such Top/Bottom.
But there are 3 different options that we can use in such scenarios:

1) Take the profits
2) Put the stoploss of our positions (already in a good profit) at +1 pip, just to be safe, and let it run.
3) Don't do nothing, let it run (a little bit dangerous but if the trend is a real strong one, it's the best option!)

From my experience, take profits is a very good thing to do, many times you will miss some big move though, but most of the time price is going to make a little reverse from there (enough to hit your +1 pip stoploss), and in case you don't use a protective stoploss, if the trend reverse you are going eventually to really regret to not have taken the profits.

So my advice: Take the profits!

And of course, if the trend is NOT particularly strong, you can even Buy Low or Sell High against it, always buying low and selling high.
  • #15
  • Nov 21, 2014 3:13am Nov 21, 2014 3:13am
Quoting leebsurag
{quote} Grossly exxagerated, glamorized theory, but unfortunately no grounds to reckon it as valid. What makes price "low" or "high" is some technical pattern or external fundamental or insider information or anything that allow you to assume that price is oversell and overbought.. And that's why you see tons of charts, conjectures, suggestions and all this sophisticated stuff you bored with

I'm astonished time after time, how often wise guys offer harsh criticism, before the thread owner had explained completely.
  • #16
  • Nov 21, 2014 3:29am Nov 21, 2014 3:29am
My Friend Tunera Thank you first
Sure buy low price and sell high price
but the problem is the definition of high and that for low
all technical analysis and fundamental one go a miles for this definition of high and low
Indicator as example in overbought area is considered as high , but high for what ! ? sure high for another low , when this low come
in another way overbought area it the area for low to another high as the price stay in it to get some strength (as in MACD) or the indicator has boundary (Stochastic ,RSI and ..)
so there is confirmation for high and low before dealing with them !
Go ahead my friend ..
I'm not a programmer and i don't like ! , but only I try to catch my view !
  • #17
  • Nov 21, 2014 3:37am Nov 21, 2014 3:37am
Quoting Sasco_me
My Friend Tunera Thank you first Sure buy low price and sell high price but the problem is the definition of high and that for low all technical analysis and fundamental one go a miles for this definition of high and low Indicator as example in overbought area is considered as high , but high for what ! ? sure high for another low , when this low come in another way overbought area it the area for low to another high as the price stay in it to get some strength (as in MACD) or the indicator has boundary (Stochastic ,RSI and ..) so there is confirmation...
Yes, there is something to consider and is that with is a high on a 5min chart may still be a very low on a 4h chart, you what i mean.
So, it is very important to first of all consider the big picture, and when we have a signal on the big picture, we may go in the smaller and smaller picture, and that is what i was pointing in my example with "Double" version, this is actually the real key of the whole system, when you buy low you must really buy at the lowest level as possible, of course we are never going to catch the tops or bottoms to the pip, but that is not required!

Below an Eurusd Chart of the current week!
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  • #18
  • Nov 21, 2014 4:17am Nov 21, 2014 4:17am
Gbpusd current week.
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  • #19
  • Nov 21, 2014 4:28am Nov 21, 2014 4:28am
Quoting tunera
Gbpusd current week. {image}
On your chart "Good point to take profits" There is a possible new long setup, correct? So do you start watching for a reversal pattern of some kind?
  • #20
  • Nov 21, 2014 4:40am Nov 21, 2014 4:40am
I will be very honest with my thoughts. This thread doesn't belong to trading systems section.

Maybe things will change, but for now this is just an abstract concept which is subject to different interpretations.

1) There is no definition of what is a valid "Double".
2) You don't define an entry level.
3) You are not defining exit.

I use very similar concept which I call ''knife'' - It is basically a sharp rejection resembling a knife. From my experience coming up with these abstract concepts is very easy compared to defining these 3 things I listed.
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