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( wait that can't be right...)
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(something is off here...)
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Well, I'm sure I'll remember by the end of this post what I was trying to say and the wisdom I was trying to impart to you all.
I love this one though. It's fantastic how fast everyone gets it. It's so natural that even the most backwards person, once faced with a "trade" of any kind has an "A-HA!" moment in the face of the beautiful equation that prints money:
The famous, most quoted, simplest trading strategy ever: Buy LOW, sell HIGH!
EASY!
Piece of cake!
If it weren't for the fact that everyone was doing it.
A friend of mine JUST got into trading and I asked what's his plan, his strategy, his (dar I ask?) edge?
"I'm gonna sell high, buy back low, sell high again...."
Well, good luck! It's neat when it works.
But looking deeper into this we notice that maybe it's not all that easy. Maybe there are traps and treacherous waters to navigate and the noob, unprepared and especially unskilled trader will sink fast while veterans will go sailing and smiling on them charts. For the high and the lows are elusive. Let's look at a graph. A coin like any other in the last year or so:
It doesn;t matter what coin this is. But there are so many highs and lows here. The thing is that even here, just looking for a second you can see how you might have lost all the coins you start with if one were to trade using solely this strategy here.
The low is not a fun place to be but what I DO like about the lows is that they are finite. A low can only go AS LOW as ZERO. You can't lose more than you have. You lose until the bag is empty and then you go home and cry.
That's the basis for the ultimate "crypto" argument: You can ONLY lose SO much but think about all you could win!!
As a buying opportunity...if it's not zero than how do you know it's "low". Low needs a reference point, a context, a timeline...Ah, it's already starting to get trickier. But let's say you bought low and you're on your way to...
The highs are fun place to be. Riding a coin to the proverbial"moon" is quite, well, a "high". But every ride must end and so often, the ride ends all too early. Because how high is high enough?
Think about bitcoin: If you got in at 1$, why not sell t 20$? After all that's 20x win, that's HIGH as high can be. Ugh, too bad it's actually a "low".
The question of what you're missing on and - to me- the fact that once you sell the ride is OVER can mess with your " sell high" strategy.
"What if" killed many a profits.
There are of course countless way to deal with all these. All skills that are useful and that one who "really" wants to stick around must learn them and put them in the toolbox. Hey, may your markets be bullish and you never have to take them out but if you don't have them and you need them. Good luck!
Stop-losses, buy back, TA, trading ranges and many other stuff that one could do to get the best out of both worlds..or miss them bot constantly.
"Buy high, sell higher"
"Buy low, buy lower again, buy even lower, cry"
"Sell high, look as it goes ever higher, cry"
"Buy low, sell high. Game over"
The idea, if there is any, and probably isnt' but really the idea is that when you are trading you are making money from someone else. Someone must have sold low and bought high for you to make money. When everyone knows at least at some very basic level that should not do that, how and why do you think you'll win with this? It's exactly the question of "edge" and what is it, where does it come from and how do you create it out of thin air.
Ultimately, "buy low, sell high" is true but useless and that's why it's the "meme" saying of trading. It's as good as "Do your best". Well, doh, but what does this even mean and how helpful is it really?
Still, can be used as a starting point in building your strategy down the line..if you are so inclined.
It's all about what you can live with and how big your "balls" are. That includes you too ladies.
I hope you all buy low, sell high and see the coin go low again at least once in your life. A wonderful, beautiful, fleeting feeling that can not be described but experienced.
