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Understand The Basics Of Trading “Buy Low & Sell High”
When I was newbie exploring trading, I don't even understand the basic even that buy low and sell high thing because when you are on the trading platform live, you'll get confused with the moving graphs, candlestick and the green color of buy and red color of sell.
Do you even understand that buy low and sell high? Why the color of BUY button is GREEN while the color of the button SELL is RED? You know when I was newbie, I don't understand it. I was even confused that the buy button has higher price than the sell button.
From that I asked myself “How it is called buy low and sell higher, when those buttons contradicts with that statement?”
From the photo above, it's BCH/USDT pair price. You'll see that the BUY button has $638.71 price while the SELL button is $636.87, see? How come it's like that?
Btw I used Stormgain chart for this and it is a margin trading platform and not on spot.
In trading there are buyers and sellers, buyers will buy the prices given by the sellers that is why the prices that will reflect on buy button is higher than the sell button.
Just look at the order book above sellers prices on the left side color red, starting from $638.68 to $639.92 the price that will reflect on buy button are the price that was asked first, when that price filled already it will move on to the next ask price until it goes higher and higher because lower prices has been bought already.
If you noticed the more people buy the more prices goes up because of the demand and supply low. Inorder to cater all demands the price will be adjusted higher because the supply is decreasing.
The current price that will reflect on the coin will be based on the volume of the trade if there is more volume of sellers than buyers then expect that the price of the coin will drop, while if the volume of buyers is higher than the sellers this will bring price increase of the coin.
The price that will reflect on the coin is based on who are the dominant, the buyers (bulls) or the sellers (bears). It's like the one who dominates will win the bid and that will be the one to reflect on the price.
If you noticed above the coin price is changing color as well meaning if more sellers then it's red and if more buyers then it's green.
To buy low just tap the BUY button, DO NOT CLICK CONFIRM. Instead click the LIMIT/SELL then input your price limit, but if you want to enter trade right away chose the bid prices above the. Click confirm. You can put the TP (take profit) amount and SL (stop loss) on your trade if you are in leverage. But if on spot you can just simply set sell limit at your own price preference.
If you are in leverage buy means BUY LONG.
In SELL this is only applicable in margin trading if your prediction of the coin price will drop, this is called shorting the coin or SHORT SELL. DO NOT CLICK CONFIRM, instead click the LIMIT/STOP then input your price target for shorting then confirm.
If the price drops then you'll gain from that, it's like you are betting that the coin will drop and if your bet is correct you'll get profit from that.
Those are the things that confuses me before, ending I buy high and sell lower instead. Sometimes I even picked prices on the Ask instead on bid if I bought coins ending right after entry price my PNL is already negative lol.
If you want to learn about trading then understanding the basics is a must.
Note: Original Content unless revamp. This is also based on my understanding, if I mentioned some info incorrectly feel free to do correction, it would be highly appreciated.
P.S this has been on my drafts for a long time , so I'll publish it 😂🤦