The term 'bottom fishing' may be a bit difficult for some novice stock traders to understand. Especially in the stock market, when encountering some stock trading experts who use these professional terms, they all look confused, and the result of not keeping up with the pace is missing the opportunity. Let's now understand the meaning of the stock term 'bottom fishing'.

Bottom fishing refers to the operational strategy of using a certain valuation indicator to measure the stock price falling to its lowest point, especially buying when it drops sharply in a short period of time, with the expectation that the stock price will quickly rebound. But there is no clear standard for what kind of price is the "cheapest" or "bottom".

Buying the cheapest stocks is an investment opportunity that all investors aspire to, and it is also a profit model that value investors believe in. However, there is no clear standard for what kind of price is the "cheapest" price, also known as the "bottom". Bottom fishing is often a description of buying at the lowest point that has already occurred, but it is difficult to determine which point in the future is the bottom.

In addition, the rapid decline in some stock prices is not due to undervaluation, but often due to fundamental issues with the company. If bought at this time, not only will the stock price not rebound quickly, but there is also a possibility of further decline before the fundamentals become clear. Peter Lynch, the investment guru, has a famous saying that goes, 'Don't bargain.'. The meaning is that if investors are confident that the stock price has fallen below a reasonable valuation level when there are no major issues with the company's fundamentals, they can consider purchasing without attempting to anticipate a bottom in the stock price.

Several characteristics of stock bottom fishing:

For determining the bottom by observing the candlestick pattern in practical use, ordinary investors can mainly grasp eight characteristics, and even memorize them like mathematical formulas. Because looking back at the historical trends of the market over the years, and even the bottom regions of different markets in various countries around the world, it can be almost proven that the following patterns are common to mid - and long-term bottoms. Therefore, based on this judgment, the accuracy will be quite high.

1. The total trading volume continues to shrink or is in a historical volume range;

2. The weekly and monthly candlesticks are in the lower range or the lower track of the long-term upward channel;

3. The price range chart is arranged in an olive shape, with the maximum increase of about 3% and the maximum decrease of only about 3%. The vast majority of market varieties are in a state of slight rise and fall;

The lower the index deviates from the annual line, the greater the possibility of a bottom. Generally, when there is a sideways resistance or V-shaped turn at a position far from the annual line, at least the intermediate stage bottom has been clearly established;

5. Although hot sectors are active from time to time, indicating the operation of funds, there is a clear lack of lasting effects, and there are no phased leading or falling varieties;

Any slight bearish sentiment on the news surface can quickly stimulate the market to move towards the bearish candlestick, indicating that market sentiment has reached its limit of fragility;

7. A considerable number of stocks have stagnant trends, with significant differences in buying and selling orders. Test 100 shares at buy 1 and buy 2 prices, with a very low transaction rate;

8. There was a general periodic pulse in the bond market, and fund managers began to be unanimously optimistic about treasury bond, which showed surprising consistency on the eve of "519" and "624".

Of course, summarizing the morphological features of the bottom into simple and easy to understand rules for memorization is only the first step. Investors should also learn to apply them to other situations. For example, the eight typical features mentioned above are completely reversed and become the technical features of the mid-term and long-term tops.