“Buying cheap and selling high” is wrong
Waviness Trading, that is, when trading aims for "a few months of ups and downs," what is the ideal entry point?
The correct answer is that there isn’t just one. Professionals and advanced traders always anticipate misjudgments, and the timing varies depending on the way you think about that part.
Also, if you deny the unrealistic “single-point target” and assume split trading, responses to price movements generate an infinite number of options.
So today,the midlinewill be explained with a simple entry philosophy.
To make money in stocks, buy low and sell high──。
That isn’t wrong, but if you try to translate this expression directly into action, practical mistakes are likely to occur, I think.
From the word “buy low,” it’s natural for minds to focus only on the vertical axis of the chart.
A chart consists of two elements: the vertical axis “price” and the horizontal axis “time.” If you forget one of them (50% of the whole), the balance is off.
What you should consider is,the “trend”.
The vectors of “up,” “down,” and “sideways.”
By looking at both axes simultaneously, you can distinguish between the same rise as a “sharp increase” and a “gentle ascent,” and you can sense changes like a slow rise turning into a sudden surge.
If you only look at the vertical axis, for example when checking stock prices, you end up thinking in terms of your buy price, current price, and daily change, which veers away from finding the optimal trading decision.
Specifically, let’s illustrate with a diagram.
When looking only at the vertical axis, the ideal buying point would be at the lowest price B.
But practically, this is questionable.
In the chart, after moving between low points, prices clearly begin to rise around F.
If you bought at B, during the stagnation at C, D, and E, you would need to hold the long position with anxiety, making it likely that you sell near the rising points at F or G.
A psychologically exhausting result is the behavior pattern called the “do-or-sell” move.
The ideal buying point isPrecisely, at E.
In trading, a key point is to avoid taking too long.
It’s not good to chase sensational short-term gains, but you want to avoid wasting time holding a position unnecessarily.
The more time you spend, the more risk you carry by staying in a position; also, leaving money idle reduces efficiency.
So, the solution is to start entering when the moment feels right, avoiding these problems.
With that in mind,actually buying at I is okay.
As a result of buying at the lowest price B, if it takes time but price movement is limited, you might end up with a smaller gain; rather, jumping on at I as prices surge could be more advantageous as a strategy.
Of course, you must be prepared to bail out if you judge it’s no good.
■ Stock Investment [Tiger’s Den] (Hayashi Investment Research Institute Channel)
On Friday, February 11, we uploaded the latest video.
Stock Investment [Tiger’s Den]
Stock Investment [Tiger’s Den] The Pitfalls of Scalping
Scalping is a method that aims for very small profits in an ultra-short term.
Naturally, it requires handling a large number of trades.
But it also looks cool and offers the appeal of settling within the day and not carrying positions overnight, which many people long for.
I don’t intend to completely deny scalping, but I find it difficult and not something I would recommend. I’ve discussed in detail the issues that worry me as someone who tends to take a skeptical view of scalping.
■ YouTube Channel Market Scramble
Tonight, the latest video for Market Scramble will also be released.
Please view it at the URL below. Enjoy!
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