Buy low and sell high works wen u buy the right company, otherwise more often than not a company trades low for a VALID reason.
Buy high sell higher works when you sell the wrong company, (in time) otherwise more often than not a company trades high due to operator providing a lollypop to gullible public.
In both cases, as you can see, if you are a patsie, you will be rogered and similarly if you are disciplined and within your edge, you would make money.
Your making or losing money has a LOT LESS to do with your strategy than your discipline to implement it.
There are many ways to make money in the market, but invariably lack of EDGE and discipline is the single most likely way to lose it.
First and foremost thing is to HAVE AN EDGE.
Coz No matter how disciplined you are in deploying your chips, if you are playing Roulette in a casino, you would slowly and steadily (with few bouts of wins and excitement) go bust.
As we have proved in previous blogs the working of a roulette, on average u have a -5% edge or house has a +5% edge over you and with a cap on max betting, that means you will invariably, eventually go kaput.
And so equation is simple
EDGE + DISCIPLINE = ALPHA.
Edge alone and discipline alone will not do it for you. You need both.
Edge can be developed either by yourself or outsource it to someone who has demonstrated it. Depends on how much time you have at your disposal.
Discipline is a deeper subject. It depends on how in sync your sub conscious is with your conscious mind.
If you have some botched up feelings, they would find expression in form of you breaking the discipline and creating a “drama” in your life.
I have seen, usually people who are in sync with their reality, which is to say they don’t have any pending Kachra, botched up emotions in the mind are more likely to stick to a plan than others.
From here, this topic actually moves to spiritual plains. Reminds me of famous Ed Seykota saying,
Everybody gets what they want from the markets.
When I read it, I was not evolved enough to understand its gravity. What Seykota is essentially saying is that even if he hands over his award winning system to you, you results would still reflect your reality.
Coz now in the above mentioned equation you have the EDGE but it amounts to NOTHING without the required discipline to implement it and stick through it in thick and thin.
In that sense, trading and Investing is actually a Life journey. Sure in a short term Luck plays a Big role in outcomes, however in long run, you can safely say looking at your P&L as to “who you are”
It will reflect your personality to you.