How to Invest

Buy High Sell Higher: Passive Trading Strategy

Discover the Buy High Sell Higher model, a powerful investment strategy that captures stock trends using momentum and a long-only approach.

Discover the Buy High Sell Higher, a cutting-edge investment strategy that relies on momentum and focuses on identifying and capitalising on trending stocks, regardless of fundamentals.

In this post, we'll delve into the key features and benefits of Buy High Sell Higher, providing insights on how it can complement your existing strategies.

What Is The 'Buy High Sell Higher' Model?

The Buy High Sell Higher model is a portfolio, medium-volatility strategy that utilises a positional, long-only approach. It filters out stocks that have risen with an increase in volatility and then selects the top 20 best performing stocks to go long on from the NIFTY 500 universe, which is rebalanced monthly.

How Does 'Buy High Sell Higher' Work?

This model takes advantage of the momentum factor, which states that stocks tend to maintain recent price trends in the future. The model algorithm picks a specified number of the top performing stocks to go long on from the NIFTY 500 universe and exits non-performing stocks, holding only the winners.

Is The Buy High Sell Higher Model Suitable For Me?

The Buy High Sell Higher model is suitable for investors who can tolerate portfolio volatility slightly greater than broader indices and can take time out once a month to rebalance their portfolio. This model is ideal for long-term wealth creation.

Note: The model is designed to take advantage of momentum in the stock market, but it is important to remember that the stock market can be unpredictable and that trends may change unexpectedly. Additionally, it is important to consider your own risk tolerance and financial situation before subscribing to this or any other trading model.

Kindly conduct your own research and consult with a financial advisor before committing to the strategy.

Model Performance

CAGR	23.5%
Sharpe Ratio	1.23
Model beta	1.38
Max drawdown	39.88%
Recovery time (Max drawdown)	511 days
Average holding period of winners	49 days
Average holding period of losers	43 days
Average win	13.84%
Average loss	7.43%
Biggest Winner symbol	ADANIPOWER
Biggest Winner Gain	93.01%
Biggest Loser Symbol	MASFIN
Biggest Loser Loss	46.12%
Longest Continuous trade symbol	DIXON
Longest Continuous trade Gain	39.27%
Longest continuous trade duration	154 days

*Backtest period for Performance Metrics is Apr’ 2014 to Aug' 2022.

Calendar days in all day metrics; returns include slippages.

Frequently Asked Questions (FAQs):

Q. How is the Buy High Sell Higher model different from other trading models?

This model is a momentum strategy which takes advantage of an upswing in the prices of stocks and sells them as soon as they show signs of price decline, with no bias towards fundamentals.

Q. What are the chances of success with the Buy High Sell Higher model?

This model consistently outperforms a passive buy and hold approach to investing, and works best when the mid and small-cap stocks are in an uptrend.

However, in a sideways market, stocks can chop around and cause losses. In a bearish market, most stocks are unlikely to pass through the model criteria.

Q. What is the minimum capital requirement?

The minimum capital requirement for the Buy High Sell Higher model is ₹2,00,000.

Q. How often do I need to act on signals?

It is recommended that you act on 2 signals per month.

Q. How long should I subscribe for?

A minimum period of 1 year is recommended for optimal results.

Final Thoughts

The Buy High Sell Higher model offers investors a unique opportunity to generate wealth by riding momentum in stocks. By filtering out stocks that have risen with an increase in volatility and selecting the top 20 best performing stocks, this model consistently outperforms a passive buy and hold approach to investing. If you can tolerate portfolio volatility slightly greater than broader indices and can take time out once a month to rebalance your portfolio, this is an ideal model for long-term wealth creation. We recommend consulting with your financial advisor before making any investment decisions.

Disclaimer: The information provided in this post is for general informational purposes only. It should not be considered as financial or investment advice. Please conduct your own research and consult with a financial advisor before making any investment decisions.

Past performance is not indicative of future results and all investments involve risk.The authors and the company they represent do not guarantee any specific outcome or profit.