By chance, I had a chat with an old stock investor who mentioned that in the past two years, he has doubled his capital again.

At first, I didn't believe it, but after taking a look at his account, I felt ashamed, but more than that, I was surprised.

Not only was the return rate so high under the backdrop of such market conditions, what surprised me even more was that he only traded one stock in these two years.

This is a very ordinary biopharmaceutical company, which has been fluctuating in a range for the past two years. In 2022, it fell by 17%, and in 2023, it rose by 17%, basically remaining flat.

With a market value of around ten billion, the performance is mediocre, and the price-to-earnings ratio has always been in the twenties (that is, earning 300-400 million a year), and the stock price has no trend, mainly fluctuating.

The lowest and highest prices are also within a range of one time, ordinary small fluctuations, and the range is about 20-30%.

A listed company without a leading edge, ordinary performance, and in the middle of the road.

An old stock investor with no technology, a little experience, ordinary and normal.

Advertisement

Just by buying high and selling low, he did it for a little more than two years, and he actually doubled his account.

Looking back at those who are dedicated to stocks, it seems that they all made money, it's just a matter of more or less, and those who lost money are mostly extravagant, constantly chasing the leading edge, and the result is always falling from the sky, falling very hard.Perhaps some people would say, the stocks I bought are just a few, but indeed I did not make money because they have been falling all the way.

There are also some blue-chip stocks that were bought a few years ago, and they have not had a good time in the past two years.

But if you look at it over a slightly longer period of time, as long as the stocks you buy do not have performance pitfalls and belong to relatively stable development listed companies, you can do some high selling and low buying, and there are very few losses.

But it seems that there are not many stock investors who can be patient.

Indeed, I am also an old stock investor, thinking about catching the main line and doing the market every year, always hoping to run ahead of the market and the index as much as possible within the limited scope of the market.

I have also seen that each main line market can double the sector in a few months, and I always feel that I can ride the wind and waves.

The result is that after being busy for a long time, it is like drawing water with a bamboo basket.

It is the same situation as most retail investors, not swimming in the hot spots and wind mouths, but suffering in the hot spots and wind mouths.

There is always a saying that we forget, that is, the outdated hot spots are worthless.

There is also a saying that we always don't believe, that is, doing familiar stocks is the easiest way to make money.In fact, I have repeatedly traded one or two stocks and have indeed made money, but I always felt that the money came too slowly. I always wanted to step on the wind, only to find that I don't have this ability.

So, today is also to calm down and review this simple and stable trading strategy again.

After all, there is no right or wrong in the stock market, a method that can make money is a good method.

In fact, any strategy in the end is just about stock selection, buying points, and selling points, that's all.

And if you want to do a stock for a long time, the focus is definitely on stock selection.

We all yearn to choose listed companies that can be bullish in the future, but this is exactly the most difficult.

Because whether it is the business model or the future market development, it requires long-term opportunities.

For ordinary retail investors, it is impossible to have this research and prediction ability, even investment institutions may not be able to accurately grasp, there will be some differences.

So, those stocks that can be grasped for a long time are often some that retail investors can understand.For example, banks have stable long-term performance and their business models do not undergo significant changes. Although stock prices fluctuate, the underlying performance remains solid, and it is easy to understand. This is also true for some manufacturing companies, software companies, and consumer enterprises that have consistently stable performance over the years.

Generally speaking, companies that can maintain stable performance over a period of 3-5 years, with little change in gross profit margin and net profit margin, and stable cash flow, are easy for everyone to understand. If you want to trade stocks and engage in high selling and low buying, it is most suitable to choose such stocks, as having no performance risk is always the top priority.

After selecting the right stocks, the remaining task is to choose the buying and selling points. Due to the relatively stable performance, the buying and selling points can be referred to the historical range.

For companies with stable performance, the valuation range is relatively effective and an important reference for high selling and low buying. The conditions for the buying point should be below 30% of the fluctuation range percentile. The conditions for the selling point should be above 70% of the fluctuation range percentile.

This may sound simple, but it is actually a bit challenging to implement.When the stock market declines, the technical charts can look very unattractive, and many investors are hesitant to buy.

However, for investors who follow a high-sell-low-buy strategy, by the time the technical charts look good, the prices have already risen.

Daring to buy during a decline is truly the right thing to do.

The same applies when selling.

Although the majority of sales are profitable, many investors tend to hold on for an extra day or two with a lucky mentality, hoping for a bigger return.

If one holds this mindset, they often miss the peak or repeatedly ride the elevator in indecision.

Of course, there is also a very uncomfortable situation, which is when a stock that was oscillating within a price range is suddenly hyped, and the stock price soars, resulting in a missed opportunity.

Waiting for an adjustment after missing out may also be a very long cycle, which can be very uncomfortable.

Strictly implementing a high-sell-low-buy strategy is fighting against human nature in trading, and the difficulty is actually quite significant.

Therefore, behind the buying and selling points of a high-sell-low-buy strategy, there is another very important thing, which is position management, and that is the core.We do not know where the true low point is, nor where the absolute high point is, making it impossible to fully invest at the low point and fully sell at the high position.

Even the grasp of some small waves is very difficult.

But if you can manage your position well, you will not miss the high and low points.

The problem will eventually evolve into how to sell in several batches at a high position, and how to build a position in several batches at a low position.

Even at a position that is not high or low, reasonable position management can still achieve a certain wave difference and increase your profits.

Of course, if you can predict the overall trend, you may be more at ease.

In the final analysis, this trading strategy is to find a listed company without performance risk and better utilize the wave to make money.

The premise of this method is that the listed company has no risk, and its stock has a corresponding fair value.

Most listed companies have performance fluctuations, which is the most normal thing.

When you cannot predict the future of the listed company, the trading strategy will be invalid, and there will be a game.Grasp the scale of transactions, make investments under controllable risks, and use fluctuations to make money; truly, this is a form of wisdom.