Tuesday, August 24, 2021

Patterns and Work

Trading is sensing the patterns. It is like poker where you are playing against another person. Attempting to go with the momentum when the price is going up, and not be exposed when it is going down. Playing off the rhythms. The natural feast and famine cycle. 

If you have got a sense that there is a long-term, stable price, then you get an understanding of how buyers and sellers move around that. You are juggling supply and demand, and playing both sides. Good or bad, this too will pass. "Buy when the price is low and sell when the price is high". Be a supplier when there is scarcity, and store up when there is abundance. 

You have to have a sense that there is a long-term price, but you don't really care what the thing is. You are making money by playing off the relationship between price and long-term value. 

If you are really brave, you can trade something where the long-term price is zero. Where there is no value, there are just people willing to buy. Until there aren’t. Trading musical chairs. 

With investing, you are not dependent on a buyer of the vehicle until/unless you sell... you are dependent on what work the vehicle does. Trading is about the patterns, investing is about the work.

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