2 opposed perceptions in trading

There are 2 main tactics in trading and they oppose each other:
One is that the buy low, sell high.
The other assumes that if a price of an asset rises, it will continue to rise, and does not rule out a buy high, sell higher.

Both ways can work and can fail.
The buy high sell higher is more common.

The buy low sell high assumes that there is a constant or more generally, a curved level , which dips below it are buy signal as strong as the dip is deeper and the sell signal is as strong as the rise is higher.
This method is correct if the true curve is known, and even then it can fail for a while.
It assumes existence of an equilibrium, not necessarily around a constant level.
One should beware in such assumptions, since at least some equilibria can be violated when one or more of their assumptions cease to be valid.

The buy high sell higher assumes that if the reasons for the rise remain in tact, the rise should remain.
It can also be explained from a supply and demand perception, that if prices rose, then the asset became rarer, and additional hoarding may help it rise higher and should be expected for this reason.
Short squeezes and long squeezes are also parts of why the buy high, sell higher, short low, cover lower can work at times.
I consider this as momentum trading without knowing what the commonly accepted definition of momentum trading is.

Since markets are rigged, a trader/investor should consider the considerations of the powers that rig the markets.
For example, Central banks create depressions and tides to the whims of their puppeteers.
Another example is BitFinEx' corruption of cryptocurrencies' prices by issuing their USDT (Tether) as much as they want and buying whichever currencies they want to buy with it, and by doing so pumping whichever cryptocurrency's price they want.
The tide floats all boats, but not equally, and for this reason they can also indirectly pump currencies which they do not even have listed.

Price averaging in the more general sense of adapting the average price, not in the sense of maintaining approximately average price when a trade fails to profit quick enough, can fail in both tactics.

Stop losses never work, since they lock a guaranteed loss, while avoiding the possibility of a profit, and they can also cut losses in both tactics.
A stop loss is risky, just as much the trade that is stopped is risky, but a stop loss guarantees a loss, while the trade that is stopped does not.
There are factors which make stop losses more favorable: taxation rules, liquidity requirements, and others.

typed at 2018-7-28, posted at 2018-7-29