No stock is ever cheap or expensive; it just is. A common rationalization is that because a stock was trading at 80 last week and now it's at 40, it's cheap! Stock prices reflect the current supply and demand for an issue, regardless of past or future. A day trader's goal is to make money today, not to analyze long-term value. Each trading day must be approached with complete disregard for the past and future. Here and now is all there is. Today is when the money will be made, not yesterday and not tomorrow.
As a day trader, do not believe for a minute that the way to make money trading is to buy low and sell high. This is false in day trading. Attempting to buy low or to short high is the way to lose money, not to make it. Buying low and selling high is a description of bottom and top fishing, which are the enemy of all traders. Bottom fishing is the by-product of a faulty ego-based approach to trading. It involves a guessing game in which you are pitting yourself against the broader consensus. Let go of your desire to bottom fish.
In a bull market one should trade only from the long side. In a bear market one should trade only from the short side.
Although the above proverb sounds deceptively simple, experienced traders who attempt to pick bottoms and tops of trends lose fortunes. Bottom and top fishing seem like the comfortable, rational thing to do. However, in the less than zero-sum game of trading, comfort and rationalization are costly goals that should be avoided whenever possible.
The most successful traders make their profits from buying high and selling higher or from selling low and buying lower. The market does not take your opinion into consideration when it decides where it wants to go. When you buy high and sell higher, you eliminate a large part of the guessing game that so many traders get entangled in. Always allow the market to show you where it plans to go. Do not try to guess when it is going to stop. Allow yourself to do the uncomfortable thing, which is to buy strength and sell weakness.
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