Buy the Higher Low, Sell the Lower High -- with David Moadel
by the higher low cell the lower hi hi this is David Modell this is looking at
the markets this is gonna be a quick video I'm gonna explain a concept to you
that you might be able to use in your trading or investing I'm gonna use a
daily chart for Apple stock but this concept could be applied to intraday
trading you know the one-minute candlestick chart 2 minute 5 minute
whatever 4 hour I'll use the daily candlestick chart for this one where
each candlestick here represents one day of price action in Apple stock before I
continue I just want to let you know that I do offer coaching for traders and
investors if you would like more help you can email me for the coaching at
David Modell at gmail.com alright so let me repeat that so you can absorb it ok I
like the idea of buying the higher low and selling the lower high ok so let's
say a lot of times especially in an uptrend
you're going to see a stock it doesn't go straight up ok stocks don't generally
go straight up or straight down they kind of stair step right
I call it stair stepping and so we're looking for a lot of times people look
for you know lower high lower low low or high low or low ok what does that mean
that means that you have a high you know swing high that's higher than the
previous high that's a good sign right and also it's a good sign when the lows
the swing low is higher than the previous swing low ok so here we have an
example of a high or high this high is higher than this one ok it's above it
and a high or low this low point is higher than this than the previous low
point make sense so higher highs higher lows that's a good sign ok generally
speaking that's an uptrend that's a healthy sign for the stock it's no
guarantee none of these ideas work a hundred percent of the time ok we're
just working with probabilities and possibilities here nothing definite
alright so what I what the strategy is here is the first part of it is buy the
higher low you know a lot of people buy the higher high right
okay so you got a higher high here compared to the last high and so they
would buy here I don't like that idea too much because you're you're buying at
a high price I like to buy low alright so how about instead of that buy the
higher low here it is this low is higher than the previous one so you might buy
here okay as soon as you start to see it well first of all you have to figure out
that it's the low so you know as soon as it stops going down starts to curl up
you can buy it you get a couple of nice maybe a gap up couple of green
candlesticks you know let's say you buy here alright so you you know you get the
impression that it's bottomed out and it's curling back up alright especially
if there's a big green volume bar there that's a good sign that's you know
volume conviction behind the you know the turn around here so let's say you
bought it this candlestick right here okay so you're buying at approximately
the the higher low good okay now you keep going or you stay in the
trade until you you're gonna sell the lower high okay you're buying the higher
low you bought here now you're gonna sell the lower high so you wait for the
lower high okay meaning lower than the previous one okay so here is the high is
it a lower high no it's a little bit higher than the previous one it's about
the same actually a little bit higher okay if it's the same or or or higher
than the previous one that that's not the time to sell according to this
method okay so you're still waiting remember you bought here so you're still
waiting for a lower high that this isn't it so then it goes down then it goes way
up and you have a higher high here this is much higher than the previous high so
that's not a lower high either so this was not a lower high this is not a lower
high alright so you wait for the next one it swings down swings up another
higher high right so this is not a lower high higher than that one okay swings
down now what about this one you have a lower high there it is that's where you
sell okay because this high is lower than this high it's a lower high
what does that tell you that tells you that is starting it's starting to Peter
out okay starting to lose the momentum it's starting to get exhausted say it
however you want if you want confirmation you can look at the volume
if this swing high is on low volume that could confirm that it's it's exhausted
okay so if you were to sell okay so you know now you don't know it's it's a high
you don't know it's a peak until it starts to turn around so let's say it
starts to you know turn over here okay so let's say here alright you get a
couple of down candles here and maybe a big red volume bar would confirm it and
and so you'd sell here okay and in this case with Apple that would
have been a great place to sell to sell this lower high okay because let's take
a look at what happened afterwards and ouch right down down down down down now
eventually it went back up but you got a pretty sizable down move here from that
higher from that lower high all the way down okay so it actually worked out
pretty well here with Apple okay alright because you would have you would have
bought around here forty four dollars and thirteen cents a share and you could
have written it all the way up until this lower high here and you could have
sold at almost fifty all right forty nine dollars and eighty cents not too
bad and you would have avoided all this pain and suffering going all the way
down here okay and then you just wait for it to start the process you know you
can rinse and repeat this you could wait for it to you know to catch the next
series of higher highs you know you see one high so you start to see the
staircase upwards the stairway to heaven again okay and you start to see it go up
a little bit of a swing low and then a higher high ah time to start the process
again alright so again you were buying the buying the higher low and selling
the lower high I hope this explained it
as well as I could to you alright and if you want more help again you can email
me for coaching I do offer that at David Modell at gmail.com if you like this
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whenever I put out more videos like this one I want to thank you for watching and
listening I'll talk to you again soon