Controversial Buy Low Sell High Profitable Strategy

Dear Readers,

I am sorry for not writing and updating my blog regularly for I am busy with my work and investment lately where there are many undervalue and profitable stocks to trade.

There are a few Investment Trainers and Experts claimed that buy low sell high is the most misunderstood investment strategy taught to the investment community where many retail investors had suffered a loss on their investments with the buy low sell high strategy taught them. 

I will share some insights on why many retail investors are unable to profit from buy low sell high strategy? 

Firstly, many retail investors are taught by the Investment Trainers or Experts to go long on stock counters breaking peaks (resistance), to go shorts on stock counters breaking trough (support) trading on breakout strategy, where trend is the investors best friends and never go against the trend either uptrend or downtrend. buy low sell high refers to buying low on higher high and higher low on trade execution points.

Secondly, many retail investors are obsessed with (following herd instinct) trading on overvalue, overhype, favourites stock counters amongst the investment community share their Technical Analysis and Fundamental Analysis on, where they usually employ scanners to scan the uptrend stocks trading on breakouts, what if there is a False Breakouts? They believe investing in a higher stock price of public listed companies generating more revenue and growth than lower stock price of public listed companies posting a loss in revenue. Indeed many retail investors study the Fundamentals of the Public Listed Companies, will not invest in a loss making companies.  Many retail investors often shun and avoid taking a position on stock counters trading at its lowest price, undervalue, underhype and Technical Analaysis suggest or indicate a lower high and lower low which refers to a downtrending stocks.

Thirdly, most retail investors are ignorant that the professional monies mainly from proprietary trading firm, hedge funds manager are conducting a daily operation on hunting retail investors with their setting stop loss on their stocks counter. Have any investor ever experience that their trades got stop out by  setting a stop loss neither generous (15% stop loss) nor stingy (5% stop loss) with a none foolproof percentage of setting a stop loss without avoid being hunted by the professional monies. 

Fourth, I believe many retail investors would have experience buying "the dip gets dipper", there is a misconceptions of buying 'the dip gets dipper" which retail investors should be following the downtrend to go on short or vice versa following the uptrend to go on long.

My understanding of how to execute and remain profitable on buy low sell high price strategy, and i wholeheartedly agree with Legendary Investors Jim Rogers and Hu Li Yang share the only way to profit in the stock market is to buy low price and sell high, not the other way round buy high price sell low price where many retail investors mostly (99%) are executing their trades which they lose money all the time following herd instinct.

For example, the outbreak of Covid 19 pandemic in Jan 2020 follow by exacerbating situation, many retail investors undertake shorting positions on the financial markets and selling their shares holdings converting to cash going against the professional monies where they are bullish while maintaining long futures. Indeed March 2020 lows was seen with most Index futures drop between a range of 30% to 40%, which i shared in one of my article in April 2020 "Has The Financial Markets Bottom", Most Index futures has risen to pre -covid 19 levels and make all time high for some geographical markets like the Dow, S&P and the Nasdaq, on the othe rhand Asian Markets Index like STI, Hang Seng Index, Shanghai Composite Index, CAC40 and FTSE100 has yet to break all time high since year 2000, 2007 and 2018.

How I remains profitable with executing buy low sell high price strategy includes the following factors are:

• I will trade into undervalue stock price using Hu Li Yang price action strategy of halving methodology, avoid herd instinct buying into overvalue stock price where risk rewards ratio is not attractive to undertake a position, buy low sell high also means i employ some technical analysis indicator like Price Channel Lines depict Overvalue Fair Value and Undervalue, Relative Strength Index (RSI), Moving Average 10Day or 10Week, Resistance and Support levels couple with Fund Flow Analysis to time market entry preferably with at least 15% to 50% margin of safety, bargain hunting for accumulation that is where many retail investors usually have their trades with stop loss set will be hunted by the professional monies. During my novice trading journey, i am taught to set stop loss either (Tight) or (Generous) often have my stop loss taken out and hunted by the professional monies on my CFD trade setting trailling stop loss or stop loss order. I have been stoppped out many times until my confidence sunk to all time low losing monies on my trade, confusion sets in whether should i have my stop loss at which level how many percentage in order not to experience stop out too prematurely once enter into a position, an investor will eventually lose more than profit given the price rally with trailling stop loss sets, the frequency and percentage on one trade does not translate into higher profit margins given the volatile market and daily hunting of Stop Loss by the professional monies. 

• Once i enter into a trade whether long or short, i will not have my trades set trailing stop or stop loss because the broking house, market makers have key data to investor taking long and short positions, know where their stop loss order placed. Market Makers are like the bankers of a casino, there will be gamblers placing their bets on player or banker in the Baccarat games on each side, bankers will not lose overtime afraid the gamblers dont place their bets. Retail Investors often experience their stop loss taken out follow by a price rally, Success to profit consistently usually depend on the investors ability to observe unusual price chart patterns and their experience accumulate to identify the price action trade setups during their investment journey.

• Should i buy a stock at a higher price (overvalue) when market sentiments still points to bullish, cross referencing my fund flow data analysis, however a sudden event (Black Swan) taking place as in the case of Covid 19 pandemic saw many stocks and indices sold off substantially, will use dollar cost averaging method to average down the price, once financial markets recovers often a forward and leading indicator to economy growth, will have my stocks unloading at a higher price.

• With availability of Fund Flow Data, it boosts my psychology execute the perfect buy low sell high price strategy to profit consistently, often stay contrarian to 99% retail investors making a mistake in their investments.

• Critical Thinking, Common Sense cross referencing my Fund Flow Data, an ability to analyse the situation of forecasting unfolding events that will be happening within the next 6 to 12 months where the opportunites arise to profit from the financial markets.

In Conclusion, many retail investors lack common sense, lack of accessing to fund flow data and their  psychology is weak, will be intimidated by price oversold hence sold their stocks at the wrong timing, sell high buy low, cause them to lose monies overtime again and again.

I wish my readers all the best in their investing journey.

Disclaimer: All news, information and charts shared is purely by my research and personal views only. This is not a trading recommendation or advice but on the basis of sharing information and educating the investment community. Different traders and investors adopt different trading strategies and risk management approach hence if in doubt please approach or seek clarifications with your Financial Adviser, Broker and Banker.