The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines, Expanded Second Edition

Question 33—Value Buying vs. Momentum Buying

Answers

1. B and D

2. A, C, and E

The principle of value buying is “buy low, sell high.” The principle of momentum buying is “buy high, sell even higher.” Value buying means going long when prices pull back to or below value. Buying on a breakout above an important earlier peak is a prime example of momentum buying. Notice several additional buying opportunities besides those marked with letters on this chart.