A friend from Hangzhou started investing in stocks with a capital of 200,000 yuan and has now accumulated a fortune of 23 million yuan, all earned through stock trading. He only used the simplest techniques, which might seem incredible to you, but that's the reality.
Why is he so good at stock trading? You might think he has some insider information, but that's not the case. He doesn't have any special tricks; it's just that he has mastered some common indicators and methods. He believes that stock trading must be simple and straightforward, a principle taught by his mentor. Additionally, having a good mindset is essential.
After much persuasion, he finally agreed to share his experience:
1. A group of people who became wealthy before 2005
They may have started by buying stock subscription certificates in the 1990s, like the elderly people known as "Yang Baiwan" (Yang Millionaire). The reason these people became wealthy is quite simple: they were pioneers. I've heard some old people tell stories about how they rode bicycles in Shanghai to queue up for stocks that no one wanted at first. Later, they bought a bunch of stocks and unexpectedly became wealthy. Once the snowball effect started, after 20 years of accumulation, their net worth is generally quite good. Of course, most of these people are now approaching retirement age.
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2. A group of people from 2005 to 2013
These people have experienced the first round of the national bull market and bear market. Those who didn't die and made money have a particularly strong speculative mindset. They like small and medium-sized innovative companies and ST (Special Treatment) stocks. Many of the current folk stock gods and swindlers in the market come from this era. At that time, they became wealthy by relying on the five golden flowers in the bull market, which increased tenfold, and various speculative themes.
3. From 2015 to the present
The stock market crash in 2015 was another turning point. The previous two groups of people can no longer play the game. The country has vigorously rectified the stock market in the past two years, and the effect is very obvious. Now, it can be said that it is the time for a new generation to rise, mainly young people who are familiar with the operation of foreign stock markets and have a solid professional ability. Many of the people with high returns this year are young people around 30 years old, with professional knowledge and a preference for blue-chip stocks.The above is particularly simple, but I believe that to be successful in stock trading and make money, there are some common points I have learned from these people:
1. First and foremost is to follow value investing.
Old stock market investors are no strangers to this. What is value investing? A very important point in choosing stocks includes in-depth research on the industry's fundamentals, having a clear assessment of the industry's competitive landscape and future development; having an in-depth understanding of the industry's leading companies and a clear judgment of their intrinsic value.
For example, in a basketball game, there are many people who are very good at dribbling. However, no matter how many dribbling techniques there are in front, the ultimate goal is to put the basketball into the basket. Value investing is like the shooter on the court, shooting as soon as he gets the ball, and the effect is very good.
So, we ultimately achieve buying when the intrinsic value is obviously lower than the price, and selling when the intrinsic value tends to be reasonable or even overvalued. In the long run, the price of a stock still fluctuates around its value. So you will find that many industry leaders are typical of value investing.
2. It is necessary to lock the target, what characteristics do lions, tigers, and wolves need when hunting?
Often, the targets these fierce beasts lock are the old, weak, sick, and disabled in the herd of herbivores. There are two advantages to focusing on these: the success rate is high, which is the law of natural selection in nature, and the same is true in investment. It is necessary to lock your own target.
You need to be clear about what kind of transaction you are going to catch, whether it is a lion, tiger, or pheasant and rabbit. First, we need to determine the target, whether this transaction is to earn double or 5 times, 10 times. The holding time cycle is a week, a month, 1 year, or more than 5 years.
3. Set the hunting range, which is the price of building a position.Only by hunting within a set range can you avoid being swayed by the market and increase the success rate of your hunting.
Secondly, it is essential to have a contingency plan, and stopping losses is the best way to deal with risks in the market.
Just like in the hunting process of a predator, various accidents can happen, so predators will understand a law of survival. They cannot be seriously injured during the hunting process. Once they are severely injured, they may lose the foundation to survive and be eliminated by nature.
Many friends who are reading this article should have the experience of "wandering" in the stock market. A decade or so ago, there were no few people who became rich through stock speculation, and of course, there were also many people who lost a lot of money. After experiencing such ups and downs, many people have seen the instability of the stock market and have lost confidence in it, leading to the loss of many investors' "favor" in the stock market.
So, what kind of thinking do those who have experienced these things still have in the stock market?
1. Pay attention to the "safety margin" when selecting stocks:
The "safety margin" here actually refers to the price-to-earnings ratio.
Before investing, you need to pay attention to the company's price-to-earnings ratio (or what the price-to-earnings ratio will be in the next quarter), which other listed companies the company holds, how much the company's net assets are, how the company's performance will be in the next year, and whether the company has a leading position; stocks with high price-to-earnings ratios, white horse stocks that the market unanimously looks up to, and stocks with debt levels exceeding 50-60% should be excluded.2. Never just look at the account profit and loss ratio:
The common problem of retail investors around the world is to hold on to their positions when they are losing, and sell immediately when they turn slightly profitable, without looking at the trend, without looking at the trading volume, and only looking at the account profit and loss ratio. The final result is that losses are infinitely large, and profits are limited. Xiaoying believes that there should be a reverse operation thinking. Hold on to profits, and cut losses slightly. This principle of taking profit and cutting loss varies according to individual circumstances.
3. Be patient:
Xiaoying has many friends who have been in the stock market for more than a year, because the Chinese stock market has cycles. As long as the quality of the selected company is not bad, and the safety margin is good, waiting for a prosperous cycle to sell can make a lot of money. Therefore, Xiaoying believes that one should maintain extremely good patience, and not be afraid of any fluctuations in the company's stock price. Do some in-depth research before each purchase.
4. Have your own stock buying ideas, and don't always listen to gossip:
The gossip here refers to two aspects. On the one hand, don't always follow the crowd. When you hear a lot of people discussing stocks at a certain stage, and discussing how much they have made, it indicates that the stock market has risen a lot. After a big rise, there will definitely be a big fall, so you should make your own judgment and appropriately reduce your holdings before the stock disaster occurs.
On the other hand, those stocks that are greatly affected by the market are often garbage stocks and small-cap companies without a safety margin, which are easily manipulated by the market makers. Therefore, this type of stock should not be chosen.
5. Only choose stocks in industries you understand relatively well:
Xiaoying believes that only by choosing industry stocks that you can understand can you make money from unequal information, otherwise you may be in a hurry and not see any valuable direction and opportunity.The above is just Little Hawk's personal opinion, for reference only! If you want to cultivate your own set of stock trading thinking, Little Hawk believes that learning is still necessary. Only through learning can you form your own understanding and cognition of the stock market and some financial products, and then gradually cultivate your own unique thinking.
Here are some summaries made by stock market traders over the years:
1. Retail investors cannot be educated, they can only be eliminated. In a bull market, do not buy houses, or you will cry in a bear market; in a bear market, do not buy stocks, or you will work in vain in a bull market.
2. Most people who trade stocks think they are smarter than others.
3. Good stocks start from breaking through historical highs.
4. For most retail investors, a painful life begins with stock trading.
5. The stock market is destined to be a gambling game where only a few people win in the end, but everyone thinks they are the winner.
6. Financial reports are used to falsify, not to confirm.
7. In a bear market, the most important thing is not profit and loss, but to get enough chips; in a bull market, the most important thing is not the chips, but how much profit is put into the bag.8. Your abilities are far less than your ambitions.
9. The best investment in education is to lose money.
10. The most critical thing in investing: to view everything without bias, not to fall in love with stocks, and not to compete with yesterday or your previous operations.
11. Do not argue with the market about right or wrong, nor with others. The account is the only measure.
12. Upward movement is the best reason for rising, and downward movement is the best reason for falling.
13. Turnover rate determines the height of a stock.
14. Those who cannot hold cash will never fight. Those who cannot cut losses will eventually face death.
15. Those who walk ahead are either pioneers or martyrs.
16. Investing is very boring, and most of the time is spent waiting patiently.17. Novices perish from chasing highs, veterans from bottom-fishing, and experts from leverage.
18. Most stories of making money are others' stories; stories of losing money are generally not shared.
19. Don't rush to sell when there's a sharp drop in the morning; there's usually a rebound in the afternoon. If there's a big rise at the end of the day, consider reducing your position, as there's a high chance of a correction the next day. A price increase with shrinking volume will continue to rise, and a price drop with shrinking volume will continue to drop. A price increase with increasing volume indicates a top has appeared, a price drop with shrinking volume indicates a bottom has appeared, and a sharp price increase with huge volume will inevitably be corrected. Each word is precious, with a success rate as high as 85%.
20. The trend is king, go with the flow. Once a trend is formed, there's no need for much analysis; it must be followed. Follow the money, don't guess, don't predict, and don't assume. If you can't judge the trend, look at the moving averages. The so-called moving averages divide the market into bullish and bearish. Bullish is up, bearish is down. For short-term, look at the 5-day moving average; if it breaks through with volume, follow it. For medium to long-term trends, look at the 20-day moving average; if it breaks through with volume, enter, and exit if it breaks.
21. Buy on divergence, sell on consensus, divergence creates a premium. This sentence is very classic, and my experience is that when a strong stock shows divergence, it's a buying point. The manifestation of divergence is the explosion of a stock on a continuous board, an increase in volume, and other characteristics, indicating a significant difference between the bulls and bears of the stock. After the divergence, if it continues to rise, when all investors think it can continue to rise, it's a selling point.
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