Most people either buy High and Sell Low, or they Buy low and sell lower.
Here are two common examples I’ve seen happening over and over. These are so common that I bet right at this moment some guy is thinking of it.
Buy low and sell lower.
If a stock (Yes Bank) does from 350 rs to 250 rs, would an average Joe buy it? Chances are, he will.
If you’re getting a stock worth 350 for just 250, you’d definitely buy it.
But then then stock goes from 250 and 150, this is where most people enter. They think that is a is a famous company and it’ll certainly perform well over time.
But then the stock goes 250 to 50 rupees and later to 6 rupees. People lost 90% of their capital in this investment.
And if you think that this is just an exception, RCom, Rcap, JP Asso, Suzlon, Kwlaty, CG Power, These are just the names on top of my head.
If a stock is going down a lot, there’s probably some reason behind it.
Most people just look lik this- the stock was at 250 and today its at 70 rs, it definitely go up as the bottom is here.
Buy High, sell low.
When we realise that buying low isn’t the answer, we often go for stocks that are in a momentum.
If a stock is going up, let’s buy it and sell it at the top.
But guess what? Buy the time most people realise the trend, its already too late. When we (retail traders /investors) buy, smart money sells.
That’s a common reason why the moment we buy the stock goes down.
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