When price is in a range why do some people buy at the top? lol

propwarrior said:
If price has been in a range for sometime why do some people insist on buying when the price is well above the average price of that range? It's just a really dumb thing to do. When these people go shopping do they actively seek out overpriced items to buy and ignore the cheaply priced items. :D
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Depends on how liquid the instrument is, what came before, what's happening now and what's anticipated. In your example, the range is anticipated to continue, whereas the entry for a successful break out trade anticipated the opposite. Also something to consider in your example is whether the positions are being initiated or closed through execution of market or standing limit orders.
 
learner2007 said:
1. Not everybody looks at charts.
2. Some think it's going to break out on this move.
3. Some newfangled indicator tells them to buy.
4. Upcoming news will be good, so it's sure to break out.
5. The buying near the top looks so strong that it's bound to break out.
6. They don't recognize the range as being a range.
7. This is definitely the bottom of this downtrend, so they want in at any price.
8. They got a hot tip from somebody here on ET!!
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I like number 8 ROFLMAO!
 
propwarrior said:
If price has been in a range for sometime why do some people insist on buying when the price is well above the average price of that range?
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it maybe because the range had reached at that time the vertical support on the bigger time-frame
 
Because trading with the short term momentum and big money that runs stops placed at obvious support/resistance is a legitimate strategy.
 
It could be a range on a 5 min chart in a bull trend but a b.o. of a bull flag on a 15m or 30m chart and the trader may be playing the larger TF. LOL
 
Here is a market that is currently trading. Is it quite dumb to buy at the red X? Surely much better to buy at the yellow X?

range.png
 
propwarrior said:
If price has been in a range for sometime why do some people insist on buying when the price is well above the average price of that range? It's just a really dumb thing to do. When these people go shopping do they actively seek out overpriced items to buy and ignore the cheaply priced items. :D
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Hello propwarrior,

You ask a very good question.

I trade the small timeframe charts in futures. The reason I buy at the top range.

1. Price is moving upwards, so I hope it continues to go higher, and breakout of the range.

I am betting the price will continue to go higher.
 
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