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Selling Strength, Buying Weakness
Started:November 3rd, 2011 (10:33 PM) by Big Mike Views / Replies:2,365 / 9
Last Reply:February 4th, 2012 (05:50 PM) Attachments:2

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View Poll Results: Which is more profitable?
Buying Weakness, Selling Strength 10 66.67%
Selling Weakness, Buying Strength 5 33.33%
Something else 0 0%
Voters: 15. You may not vote on this poll

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Selling Strength, Buying Weakness

Old November 3rd, 2011, 10:33 PM   #1 (permalink)
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Selling Strength, Buying Weakness

I'm interested in hearing from you guys on a fundamental question.

Is more money to be made:

- Selling Weakness, Buying Strength

or

- Buying Weakness, Selling Strength

I think the answer to the question will greatly depend on your personality and if you are a with trend or counter trend trader. But I am curious what you have to say.

Mike

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Old November 3rd, 2011, 10:33 PM   #2 (permalink)
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Old November 5th, 2011, 10:31 AM   #3 (permalink)
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Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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Old February 4th, 2012, 09:37 AM   #4 (permalink)
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An Old post Mike,,
but I had the same questioning

Here a link to a document that i just read

Trading Pullbacks | Learn How to Buy Weakness and Sell Strength

Have a good day

Martin

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Old February 4th, 2012, 10:38 AM   #5 (permalink)
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Futures Edge on FIO

Are you a NinjaTrader user?

 
How do you perceive or measure weakness on a chart? or at what point does P.A. become weak?
How do you perceive or measure strength on a chart? or at what point does P.A. become strong?

Is it not just a cliché similar to the famous "trend is your friend" mantra? Maybe it's time to update the cliché: sometime weakness is your friend, sometime strength is your friend

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Old February 4th, 2012, 10:46 AM   #6 (permalink)
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As we become more experienced, we are more likely to be able to see what kinds of weakness to buy.

For me, I really like to buy the dips but will force myself to not buy on 'obvious' downtrend, overall heavy selling days, especially after big moves up, where we're more likely to have a quick and sharp drop. Like now.

Buying weakness -- via indexes, not individual stocks; more risky -- can be a great way to go, scaling in, using support areas on say, a 60 minute chart and of course, daily charts too. Managing your risk with conservative position sizing, selling into strength, keeping your total inventory never too big.

"The Future Ain't what it used to be"

Last edited by heywally; February 4th, 2012 at 10:55 AM.
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Old February 4th, 2012, 10:58 AM   #7 (permalink)
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trendisyourfriend View Post
How do you perceive or measure weakness on a chart? or at what point does P.A. become weak?
How do you perceive or measure strength on a chart? or at what point does P.A. become strong?

Is it not just a cliché similar to the famous "trend is your friend" mantra? Maybe it's time to update the cliché: sometime weakness is your friend, sometime strength is your friend

Agree with the cliche' concept. Some buy into strength. Which one will correct? Depends on what others think. Psychology of the market participants will dictate the correct method, but of course you don't know what that is. Build a complete strategy around a particular philosophy and you'll see whether it's worth it or not through back and forward tests.

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Old February 4th, 2012, 12:03 PM   #8 (permalink)
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Big Mike View Post
I'm interested in hearing from you guys on a fundamental question.

Is more money to be made:

- Selling Weakness, Buying Strength

or

- Buying Weakness, Selling Strength

I think the answer to the question will greatly depend on your personality and if you are a with trend or counter trend trader. But I am curious what you have to say.

Mike


Having spent quite a few years studying a method that uses the premiss that increasing volume with increasing price
(increasing price meaning price continuing to move in same direction), and that the price/volume relationship moves in a fractal (waves within waves) nature, we may be able to better see where we will have weakness/strength.
It's very much a matter/issue of context however.
ie: within which leg of which wave/fractal are we.
In theory, we can know which, so we can trade all legs (weakness/strength) of each fractal.

Here are 2 charts from last August as an example.

Every moment I wake up I realize I know nothing, and then I smile...
Attached Thumbnails
Selling Strength, Buying Weakness-prv_1_es-09-11-5-min-25_08_2011.jpg   Selling Strength, Buying Weakness-prv_es-09-11-5-min-24_08_2011.jpg  

Last edited by zt379; February 4th, 2012 at 12:25 PM.
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Old February 4th, 2012, 01:54 PM   #9 (permalink)
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Big Mike View Post
I'm interested in hearing from you guys on a fundamental question.

Is more money to be made:

- Selling Weakness, Buying Strength

or

- Buying Weakness, Selling Strength

I think the answer to the question will greatly depend on your personality and if you are a with trend or counter trend trader. But I am curious what you have to say.

Mike

Not even open to debate...

I think we have to clear up a semantic issue first.

There's weakness/strength, and there is relative weakness/strength. You want to buy weakness in markets with good relative strength, and sell strength in markets that are relatively weak. This falls into the trend following methodology and takes into consideration the timing of you trades along with the direction.

If you are trading a range market with a mean reversion methodology, there isn't any trend (by definition), but you are still buying weakness and selling strength, and it still takes into consideration the timing and direction of your trades.

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Old February 4th, 2012, 05:50 PM   #10 (permalink)
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I trade a swing trading system that buys weakness. Of course "weakness" is a vague term; there's weakness and then there's WEAKNESS.

The kind of weakness that I'm looking to buy is the latter. This is the phase when panic has set in, when a stock has made a move several standard deviations outside the norm and traders who bought on initial signs of mild weakness are getting stopped out with heavy losses. In my experience, these moments of capitulation are the best time to enter long positions.

Enter too early, and you'll be the one selling in a panic at the lows. Just my two cents.

-----------------------------------------------------

"If you must forecast, forecast often."

-- Edgar Fiedler
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