I think even the most powerful people in the investment industry dare not guarantee that every transaction they make is profitable, and Buffett's stock trading cannot be said to be able to achieve a guaranteed profit. Therefore, for those who use recommended stocks to attract users with a guaranteed profit, I can only say that exaggerating oneself excessively makes others feel untrustworthy. As a professional stock trader with decades of experience, what I want to say to everyone is that stock market trading involves both returns and risks, and there is no such thing as a guaranteed profit. All we can do is try our best to maximize our own interests.
I first started trading stocks in the 2000s, and after more than a decade, I have experienced two rounds of bull and bear trading. I still have my own insights on the mentality and methods of stock market trading. Perhaps this experience is not very valuable to everyone, but it can be used as a reference for new stock traders. At that time, learning how to trade stocks was to explore on your own, and then use simulated stock trading to train yourself. Unlike now, everyone has quality courses and training camps as guidance, and someone can give more guidance or learn from the best. In this learning mode, everyone can also make faster progress.
Some people say that the stock market is like life, it is a kind of cultivation, and I am constantly growing in this kind of life cultivation. Simplicity, letting go, inaction, fearlessness "is the summary and interpretation of my current mentality. Here are some trading experiences I have summarized over the years, for your reference only.
1. Don't pay too much attention to short-term fluctuations. Being too concerned about the results of short-term fluctuations directly affects your operations, which will increase your frequency of operations and lead to continuous chasing after gains and losses, ultimately contributing negative returns. If you belong to this type of person, every rise and fall will make you feel uncomfortable, then try to be bearish as much as possible. Work hard, spend time with your family, or go on a trip. The key is that later on, you will find that the benefits of not watching the market are much greater than those of watching the market every day.
2. We must do asset allocation and never invest all our money in the stock market. At least, you should keep enough basic expenses for three months around. It is better to keep enough for emergency use for highly liquid investments such as banks or Alipay. You can't spend every time by selling stocks. Because it's okay for stocks to rise, if they are trapped and forced to sell, it will double your mentality and lead to a vicious cycle of making foolish moves.
3. We must eliminate the mentality of being a gambler and not expect to make a fortune by relying on a certain market trend. If you are not a professional investor, I do not recommend you to use leverage, because the mentality of using leverage is a gambler mentality, which means running away just to make a profit. But when you fall down with leverage, you won't understand that feeling without experiencing it. Two years of futures experience have made leverage my forbidden zone. Last May, I repeatedly reminded one of my friends to unload their leverage, but in the end, they were still unable to avoid a liquidation. Later, he told me that he had the idea of making another profit. When he saw it rise, he thought he would sell it for another day tomorrow. When it fell, he thought he would rebound and sell it. Later on, if I wanted to sell it again, I couldn't sell it anymore, and a thousand shares were suspended.
4. Don't rush for success and operate frequently
Many people rush into the stock market with the belief that investing in stocks can make a lot of money, but in the end, they realize that the stocks they buy are not profitable, so they always buy and sell frequently, feeling like they are doing nothing and waiting for death.
In fact, when it comes to baccarat, there are about 70 small games in each round, and most participants will bet more than 30 small games. According to the law of large numbers, the more games they bet, the closer the chance of winning is to 1/2. After deducting the 5% withdrawal required by the winning casino.
In the end, the probability of losing money is actually increasing. Although stocks and baccarat are not completely identical, they are still similar. You should know that even martial arts masters wouldn't switch to another martial arts skill if they can't practice it well. Being possessed by demons is not fun.
5. Seeing but not receiving, never dying and never stopping
Many people belatedly heard that a bull market had arrived, so they followed their friends' advice and bought a stock for short-term trading. However, they found out that they had actually closed at two limit up levels. They felt good about themselves, but when they saw that it didn't close, they persisted in their efforts, and in the end, the money they earned went down the drain, leaving them with losses.
There are also some people who bought a stock for unknown reasons, lost 30%, insisted on not selling it, and after ten months, the stock price returned. They felt like they didn't lose anything and quickly sold it. But what about the opportunity cost and time cost of the principal?
Stock selection precautions
Beware of changing the stock of the CFO.
In fact, changes in the senior leadership of listed stock markets can affect the trend of stocks. But there are even more powerful ones. One is the financial seal, which ensures the clarity and objectivity of the financial director's replacement in relation to the annual financial report. The other is an accounting firm. In this situation, the investment risk is very worrying. The law stipulates that changing accounting firms must be done every four years, but this has a significant impact. This also needs to be noted.
Beware of stocks that have fallen below their net asset value per share.
Falling below the net asset value per share is the value obtained by subtracting liabilities from assets, which is usually due to overvaluation of asset value and undervaluation of liabilities. Overestimation of asset value often occurs in the recognition of risky assets such as inventory and accounts receivable.
The things I have encountered or summarized in the past decade of stock trading are not something that can be summarized in such a short article. Now, I face the changes in the stock market with a calm attitude, strive to control risks, and maximize profits. If you want to share with me, please follow the Koufu Stock Trading Training Camp. My team welcomes you to join at any time. Let's learn together, trade stocks together, and achieve financial freedom together.
