Tuesday, January 5, 2010

Buying into Strength

We have an old adage: Buy Low and Sell High.

Yet, we can never say what the actual Low is? Therefore, if you, the trader believe that prices are likely to go higher then the current price is a Low.

This is a recurrent theme in many of my CNBC Investor Camp presentations.

Now, we can never know with certainty if prices will go up in the future. Therefore, we, traders, rely on probability.

Think about it.

3 comments:

prabhakar said...

Dear Mr. Sudarshan Sukhani,
Last week you had recommended Patel Engg. as a shorting opportunity (CNBC TV18 / Top five picks). I heard you saying that shorting has to be done by professional traders only.

Could you please elaborate why shorting may not be suitable for everybody.
Thank you.

ASHOK JOSHI said...

Sir, when are you comming to Lucknow in CNBC Investor Camp? Is it in Jan,2010 ? If yes, which date, pleae inform.

Jagdish said...

It is the nature of man to try to be perfect and this is precisely the downfall of many a trader. In the markets, one has got to use the probability with an assymetric payoff. If you are willing to give up the fact that you WILL not be perfect, then this market is for you. As brilliantly put by Larry Hite - IT IS INCREDIBLE HOW RICH YOU CAN BECOME BY NOT BEING PERFECT.