Selling Into Strength
 |
Definition of 'Selling Into Strength'A proactive trading strategy carried out by selling out of a long or into a short position when the price of the asset being traded is still rising but is expected to reverse in price. Opposite of "buying into weakness". |
 |
Investopedia explains 'Selling Into Strength'For example, say a trader believes ABC stock will rise above $5.00 but expects it to reverse at $5.75. If the trader buys ABC stock at $5.00 and sells when the price hits a predetermined exit price of $5.50, that trader would be selling into strength. Conversely, a short seller may sell into a rising price with the anticipation that the stock price will soon decline.Many traders will wait for confirmation of a change in price movement before reacting. However, by the time a reversal is confirmed, it may be too late and the trader may end up losing. Thus, by trading against the prevailing trend in the anticipation that it will soon reverse, the trader allows him- or herself a greater margin of safety. As the saying goes, "missed money is better than lost money". |
Related Definitions
Articles Of Interest
-
Trading Double Tops And Double Bottoms
We look at how Bollinger Bands help accurately project entry and exit points for pattern traders. -
Momentum Trading With Discipline
This type of strategy demands controlled decision-making, requiring a continual refinement of entry and exit techniques. -
Trailing-Stop Techniques
The important decision to exit a position must be based on more than emotion if you want to be a disciplined trader. -
Market Strength Tutorial
Here you can learn about some of the indicators that traders and brokers use to determine the direction and strength of the market's present trend. -
Market Summary For May 17, 2013
The U.S. stock markets moved sharply higher this week, on track for its fourth straight week of gains, driven by ongoing improvements in economic indicators. -
Parabolic SAR Buy Signals
The Parabolic SAR indicator is flashing "buy" in these four diverse stocks. Not simply relying on one indicator though, I take a look at the overall technical outlook and determine which ones ... -
Market Summary for May 10 2013
Major U.S. indices moved higher this week but, given the new highs, traders should watch for retracements next week. -
Buying The Upward Trend Channel Bounce
Find out how to set up the trades for four stocks that are moving higher within well-defined trend channels. -
Market Summary for May 3 2013
The U.S. stock market extended its rally higher this week, led by technology stocks and lagged by small-cap stocks. Traders should be watching a number of other reports due out next week. -
Specific Stocks "Hammering" Out a Bottom
A Hammer candlestick pattern can signify a turn-around in a stock, marking the shift from a downtrend to an uptrend. Here's how to indentify the signal, along with four stocks which may be hammering ...
Free Annual Reports
