The quickest way to lose it all is to buy at the peak and sell at the bottom. So, when prices are rising, does that mean it's dangerous to buy assets? On the other hand, trend-following traders say that if you see a growing trend and rising asset prices, you should buy instead of waiting for a drop. If it's going up, it must be good, right? Is there a contradiction here?

Let's try to figure it out. Ideally, you want to catch that coveted bottom where a reversal begins. The problem is that the bottom is often a false one. A trader buys a declining asset hoping for a reversal, but the downward trend drags it down further. This is a common reason for losing capital during panic, when people trying to make a quick buck get caught by the continuing bear market.

Sometimes the bottom is more or less obvious, and other times the market surprises you with its bottomlessness.

That's why many swing trading books recommend joining clearly established trends. When it’s clear that the trend will be long and strong, you can join in even after a significant price increase and still make money.

So, when's the risk of hitting the peak price? There are various methods to determine this point - some analyze chart patterns, others rely on indicators. Volume is a crucial indicator: if the price is rising and volumes are also steadily increasing, everything’s fine - the trend will last a while. But if the price keeps going up and volumes are low, that’s dangerous.

There’s no surefire way to spot the turning point. Each trader, based on their own experience, selects tools to help them enter and exit trends at the right time. This is how the so-called market sense is developed, distinguishing a pro from an amateur.