BUY LOW, SELL HIGH?

In other words buy when there is a fear on the market and sell at the euphoria. Is that simple to make money? YES. I do believe, but most of us cannot understand that.

I am watching each day for few hours the CNBC and Bloomberg TV and last week I saw the same symptom what I had seen plenty of times previously. Namely how fast could change the sentiment of investors. Last Monday everybody, all anchors and normal investors were absolutely bullish and by last Friday most of them got sceptical. Within five days the sentiment of the mass turned from bullish to bearish.

Here comes the point if we want to make money we have to different things than the others do. Cause if we do what the mass does we will be also in the 90% of speculators who are losing his all money. We have to be contrarian. As my 3 Letter Rule, my number one "ABC Rule of Trading" says "LWAYS BE CONTRARIAN."

Most of you has heard about the „6 Months Rule of Forex Market”. It says within 6 months 90% of the traders losing their whole capital. That is true, no argue. My statistic is a bit worse, my bet is between 95-98%. I analyzed that majority what they are doing wrong. I found they have 10 big mistakes. The biggest one is that they are following the mass and following the media. They are weak, they don’t have any trading plan and easily can be oriented or reoriented.

I am reading and watching news too, but only for seeing the sentiment of other investors. I don’t trade that what they think or do. I totally do of the opposite of that. For instance I love the AAII Sentiment Index. It tells me more about the market that any other hell of indicators. http://www.aaii.com/sentimentsurvey

This is a great sentiment marker to me. I am simply bullish when most of the traders are bearish and I am being bearish when the majority is bullish. I don’t want to be only a member of mass. I want to be a part of the minority of 2-5% who makes money constantly.

It pays to buy when everybody else is selling, and sell when everybody is buying. I know it is not a popular thing and you will be alone with your opinion, but I can assure you it will bring money for you in long-term. Honestly I do believe this is the only way to earn money in the markets.

What is your guess? It is a good opportunity to buy or not the SP500 below?

Take a look at our Swiss fund and begin to invest with us!

The BFM Assets Team.