There is a popular method in the stock market that is believed to be a sure way to make money, which is to sell high and buy low.

However, it seems that everyone understands this method, but no one can actually execute it.

Nowadays, when people talk about selling high and buying low, they think it's a scam, something that anyone can say but can't do.

Recently, I have been mentioning the concept of selling high and buying low more frequently than usual.

The reason for this situation is that the current market is more suitable for such a strategy.

If it were under normal circumstances, the strategy of selling high and buying low itself is not a strategy, but if applied now, it is a good strategy that can be executed.

Let me explain from several dimensions.

Firstly, what kind of market style does selling high and buying low conform to?

If the market is in a one-way downtrend, is it suitable for selling high and buying low?If the market is in a unidirectional upward trend, is it suitable for selling high and buying low?

Buying low, there is a lower point, selling high, there is a higher point, then selling high and buying low naturally becomes a joke.

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The market style that fits the strategy of selling high and buying low must be relatively a range-bound trend.

That is, when you feel that the market has little room to go down, and also little room to go up, then you can only do some selling high and buying low within a range.

In non-volatile markets, the success rate of selling high and buying low is not high, and it does not have particular value.

For example, stocks that start from a low position, if you keep selling high and buying low, may not earn more than holding long-term, and a lot of energy is needed for trading in the middle.

Similarly, for stocks that are falling all the way, the best way to reduce losses is to cut losses and leave, rather than selling high and buying low.

Market styles and strategies need to correspond one by one.

When you can judge that the market is a style dominated by fluctuations, you should adopt more strategies of selling high and buying low, or it can be called chasing falls and killing rises.

Second, how to effectively manage positions in selling high and buying low.The reason for engaging in high-selling and low-buying is the judgment that the market lacks significant trend-based movements.

Emphasis on position management is highlighted because the essence of high-selling and low-buying is to earn profits through position and price differences.

At the same time, position management can effectively reduce risks.

For example, using 30% of the position as a base position and 30% as a rolling position to conduct high-selling and low-buying.

In a market with range-bound fluctuations, there is no opportunity to make a lot of money, so the first consideration is the rationality of the position.

Having a position of 30-50% is already considered quite high.

If you want to earn more money, you must use the floating position to increase profits.

The proportion of this part of the position is usually a 1:1 base position or a 50% base position.

The essence of high-selling and low-buying, whether it is intraday or swing trading, is to add positions on the way down.

Whenever there is an opportunity to make money, start to reduce positions in batches until what remains is still a base position.What needs to be done is to simply define the trading range, and then you can prepare for the strategy of selling high and buying low.

Thirdly, how to effectively execute the strategy of selling high and buying low.

The execution of selling high and buying low is actually the biggest issue.

This is because the mentality of retail investors is naturally the opposite of the strategy, as it involves buying during dips and selling during rises, while retail investors tend to do the opposite, buying during rises and selling during dips.

During a decline, the technical patterns can become very ugly, making people feel uncomfortable.

At this time, the difficulty of buying stocks against the trend is very great, at least there will be some psychological pressure.

Why can quantitative strategies harvest retail investors with selling high and buying low? Because they have no obstacles to this strategy, and their execution is 100%.

However, retail investors will buy early in the decline, so that by the time the price drops significantly, they dare not add to their positions.

The deviation in execution is the key reason why the strategy of selling high and buying low is difficult to implement.

When your mentality cannot be corrected, and you insist on buying only when the price rises, and selling only when the price breaks through the support level, then the strategy of selling high and buying low can easily play tricks on you.Of course, the key to execution is still the judgment of the volatile market, which needs to be more precise.

It is difficult to cope with emergencies if one cannot know oneself and the opponent. Once entangled in emotions, it will naturally be very passive.

Fourth, how to deal with the situation when mistakes occur.

Doing high sell and low buy will also make mistakes, and it is impossible to be 100% correct. Having a 70-80% accuracy is already good.

So what should be done when mistakes are made.

For example, after buying low, the stock price continues to fall, how to deal with it.

This situation is quite common because no one can guarantee that they buy at a relatively low point.

If the judgment is wrong, it is basically certain to stop loss, even if it is wrong, it is necessary to stop loss.

The most common is the breakdown of the box.

Originally planned to do high sell and low buy within a range, but the result is that it broke through the lower edge of the box.Though it's not a hundred percent certain, it's quite likely that the trend will continue to decline, with capital digging a new big pit.

Therefore, setting a stop loss is very necessary for investors who engage in high selling and low buying.

It may seem that setting a stop loss is like a failed high selling and low buying, but this is precisely the key to ensuring the effectiveness of high selling and low buying.

The strategy of high selling and low buying actually has specific environments and specific trading methods, including stock selection, position size, and buying and selling points, which are much more complex than these four simple words.

So, these four words seem simple, but in reality, they are very complicated.

Simplifying the complex is not as easy as it seems.

High selling and low buying is difficult because stock trading is difficult, and the core of stock trading is high selling and low buying.

Before the market has formed a trend, this is the only strategy that can make money.

In the past few years of the big A (referring to the Chinese stock market), those who have made money are basically brave investors who engage in high selling and low buying.In any market where the game is about the existing stock, this strategy is the most effective one.

Only when new increments enter will there be a different market situation.

Many times, retail investors show greed at the wrong time.

They always yearn to get rich through stock speculation, especially in a bear market, they are eager to make money.

They don't realize that profit and loss come from the same source. When you think about the pattern, the market has already patterned you.

Finally, let's talk about a key point.

In fact, the essence of selling high and buying low also includes an important aspect, which is market sentiment.

This is something that retail investors will overlook, or it's hard for them to judge.

What exactly is market sentiment, and how to judge when market sentiment has hit bottom, and when it will peak again.

In fact, this is not particularly complicated.The overshoot and overcorrection indicators are the best measures to test sentiment, and there is also the panic index, which can also reflect the market's emotions.

Volume can also explain the rise and fall of market sentiment from a certain dimension, it just depends on whether you can understand it.

The highs and lows of market sentiment are the points with the least risk for high selling and low buying, and they are more referential than any other technical indicators.

When we do high selling and low buying, the focus is on the standards, when to do it, and how to do it.

Without rules, just relying on these four useless words, it is impossible to make money.