Why do losing traders always buy tops?

It's nice to read Livermore but it won't give you an edge in 2007 :)

It's true though what he said and you quoted, BUT... there are certain aspects that make the equation a little more complicated.

Some markets are sooo hard to trade on a breakout basis, others are breakout heaven. The same is true for different timeframes...

I adhere to the statement that you must master more than one technique BUT have only one strategy, in order to ADAPT to more markets out there....

For example. We all know the Triple Screen, which i love and use for a long time now... But, some markets require buying low, while others require buying a breakout as they have large accumulation periods, but all that respecting the three screen strategy...

Cheers y'all
 
I forgot.

I had a colleague who always bought "so called tops" when his CCI made a new high,

BUT

He did that in the most illiquid markets out there... The ones that when started, they don't stop that easily...

As an example, in currencies, the GBPUSD pair has a very low volume compared to EURUSD... That is why the GBP has a wide range... Once selling begins, there is no available liquidity to stop the selling with a serious BUY...

Se therefore, people are selling like crazy and the downtrend stops when the first bears decide to take profit, while the bulls have little chance of stopping the decline...
 
Quote from palmbeachdude:

It is not called a "top" until "after the fact". Until then, it is a new high. That is the point I am making. This is more than just semantics.
More...

i couldnt agree more with palmbeachdude. the thread starter was speaking in past terms. he is wondering why loser traders always seem to buy tops... (this is NOT the same as new highs)

the philosophy of buying tops in the future is a very sound strategy for certain traders.

past vs future are two different dynamics. to ignore the variable of time when analyzing these dynamics leads to the errors in this thread.

the first dynamic is that of the trader that sits on the sideline and watches a position move in his intended favor yet he did not act. it is when the pain of perceived lost profits becomes greater than his fear that he acts and thus he buys a top.

the second dynamic is that of a trader that enters a favorable position after a period of consolidation and has begun its path in the favorable direction again.
 
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