BUY LOW SELL HIGH NEW Behind the truism is the tendency of the markets to overshoot on both the downside and the upside. Part of the reason is a pure herd instinct that drives stock prices. The investor who takes an unbiased look at the market might be able to see the herd instinct at work and take advantage of the extreme ups and downs that it causes. That investor can buy low and sell high.
Unfortunately, it's easy to determine after the fact whether a price was too low or too high and even why. During the moment, it is monumentally difficult. Prices both affect and reflect the psychology and emotions of market participants.
For this reason, "buy low, sell high" can be challenging to implement consistently. Traders trying for a more objective view consider other factors to make a more informed decision. These factors include moving averages, the business cycle, and consumer sentiment. also nl