Psychology at 52 week highs/lows

Quote from dafong:

I know a stock move depends on a lot of things, but holding everything else constant, would you rather buy at a 52 week low or 52 week high (for short term moves) / would you rather short at a 52 week low or 52 week high (again, for short term moves)?
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I'd rather short a 52-week low personally. This is what I know and do so I am a bit biased. However, determining the appropriate 52-week low to short is key. Not just any will do.
 
Market direction helps a lot.

Those who shorted stocks at 52 week lows right after the Feb 27 2007 correction, got squeezed rather quickly.
 
Quote from crgarcia:

Market direction helps a lot.

Those who shorted stocks at 52 week lows right after the Feb 27 2007 correction, got squeezed rather quickly.
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Unless you are trading a "market neutral" strategy you have to take into account market direction. So I'd have to agree it helps alot. As for shorting 52-week lows and getting burned... it happens. The reverse can be said when buying 52-week highs. Thats why if your trading or swing trading your risk management has to be followed perfectly. No emotions allowed.

There are profitable ways to trade both kinds of break-outs. I enjoy the panic of a 52-week low so I choose to trade them.

Good trading,

MS
 
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