What stops someone from just selling a stock at every peak and buying at every dip? Wouldn’t you be making money either way the stock goes?
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There used to be a good website out there that would sample historical stock data and allow you to click a button to buy and then reclick to sell. You would watch the rise and fall in real time and then try to time the market off what you were seeing. It was a great tool in showing how it’s impossible to know what is going to happen.
If you try to time the market what can easily happen is you buy a stock, say at 10 dollars. It rises to 15, and you think it will go down back to 10, so you sell the stock and profit 5 dollars, except the stock ends up going up to 20 dollars. Now, if you rebuy the stock at 20 dollars, you have to restart the process whereas if you had simply held you would have had 10 dollars in gain.
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