Always Buying High and Selling Low? Here’s How to Actually Spot Market Tops and Bottoms

 

It’s the oldest trader joke in the book:
“Buy low, sell high.”
Sounds simple — until you try it in real life and end up doing the exact opposite.

You buy just before the market tanks.
You sell right before it rockets.
It’s not bad luck — it’s not knowing where the real highs and lows are.

---

The Myth of the Perfect Top or Bottom

First, let’s kill a fantasy: you will almost never catch the exact top or bottom.
That’s lottery-ticket thinking, and it leads to paralysis — you wait for the “perfect” entry, miss it, and then FOMO your way into a bad trade.

The goal isn’t to be perfect.
The goal is to identify the zones where the market is likely to turn.

---

How to Actually Read Highs and Lows

1. Look for Strong Rejection Candles
   Long wicks at the top mean sellers smashed price back down.
   Long wicks at the bottom mean buyers fought back hard.

2. Volume Confirmation
   A high followed by a spike in volume can signal distribution — smart money unloading.
   A low with big volume can signal accumulation — big players loading up.

3. Multiple Timeframe Check
   That “high” on a 5-minute chart might be meaningless on the daily chart. Always zoom out.

4. Support & Resistance Zones
   Price reacts to memory. Previous highs/lows are magnets for future reversals.

5. Momentum Shift
   If price makes a higher high but momentum indicators (like RSI) make a lower high — watch out. That’s often the start of a reversal.

Master the Markets: A Step-by-Step Beginner's Guide to Using thinkorswim: Unlock Your Trading Potential: The Ultimate Beginner's Guide to thinkorswim

---

The Emotional Trap

Tops and bottoms are where emotions run hottest.
At the top, euphoria tells you “it’ll go higher.”
At the bottom, fear tells you “it’ll go lower.”

Recognizing that these feelings are signals to slow down, not speed up is one of the most underrated skills in trading.

---

Practical Approach

• Buy in the Zone, Not at the Price — Use a range instead of a single magic number.

• Scale In/Out — Instead of going all in, enter gradually as price confirms.

• Let Price Prove Itself — Wait for the turn, don’t predict it blindly.

---

Final Thought

Trading highs and lows isn’t about guessing the future — it’s about recognizing the footprints of big players and positioning yourself accordingly.
Get good at spotting those footprints, and you’ll stop buying at the peak of the party and selling at the bottom of the panic.