Change point
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serialized work "The Spirit of the Market, The Essence of Trading" Part 36
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I hate winter.
Perhaps it’s because I feel it’s a time when life activity slows down...
But as soon as it starts to warm up even a little, my mood becomes like summer!
I become cheerful.
“Buy low and sell high” is a fundamental idea for making money.
Mathematically, it isn’t wrong. But as a practical matter, it’s weak.
For example...
Stock A has been crawling around 300 yen for a long time.
Stock B rises from 300 yen to 600 yen in a short time and stays there.
A has less downside risk, but it risks staying still.
B seems to have higher downside risk, yet the probability of going up or down is even, and it may move quickly since it has already begun moving.
The criteria differ, but one cannot say unconditionally that buying A is advantageous, nor can one conclude at least that “you should not buy B.”
The question is how strictly to adhere to the idea of “buying cheap.”
Let’s think a little more about Stock B, which has doubled to 600 yen.
1. Purchase with expectations of further rise
2. Short sell with the logic that it will go down after rising
3. Do not touch it
4. Take a position toward the direction that breaks away from the 600 yen consolidation
The last option 4 is fine whether it goes up or down.
It means there is a choice to initiate selling at the moment you judge that the price has begun to decrease.
Rather than asking “Is it high or low?” the practical approach is to focus on so-called “points of change.”
Market Scramble January 29 broadcast discussed the theme of “capturing points of change.”
(Deep consideration of wave trading — Capturing the central origin line, the point of change)
Next Monday, February 5, we will also broadcast.
We’ll go deeper into trading with content that continues from January 29.
Stay tuned!
