What is replenishment? Replenishing a position refers to continuing to buy the same stock when the stock is falling. This is done to reduce the cost of holding positions, thereby reducing the losses caused by the decline in stock prices. Replenishment is a passive coping strategy after being trapped, which is not a good way to break free in itself, but in certain specific situations, it is the most suitable method.

1. Unable to replenish positions in the early stages of a bear market

Those who trade stocks understand this principle, but what if some investors cannot distinguish between bull and bear turning points? There is a very simple solution: if the stock price does not fall deeply, we will resolutely not replenish our position.

If the current price of the stock is 5% lower than the buying price, there is no need to replenish the position, as any intraday volatility may lead to a pull-out. If the current price is more than 20% -30% lower than the purchase price, or even if some stock prices are abruptly cut, then it is possible to consider replenishing the position. The space for further decline in the future is relatively limited.

2. The overall market has not stabilized and there is no need to replenish positions

When the market is in a downtrend or experiencing a rebound, it is not possible to replenish positions, as further declines in the stock index will drag down the majority of individual stocks, except for a very small number of stocks that have strengthened against the trend.

The best time to replenish positions is when the index is at a relatively low level or has just reversed upwards. At this point, the potential for an increase is enormous, and the possibility of a decrease is minimal, making it safer to replenish positions.

3 weak stocks not supplemented

Especially for those unbranded stocks that do not rise when the market rises and fall when the market falls. Because the purpose of replenishing the position is to use the profits from the stocks that were later replenished to compensate for the losses of the stocks that were previously hedged. Since this is the case, there is no need to limit oneself to replenishing the varieties that were originally hedged.

It's not crucial what variety to replenish the warehouse with, the key is to obtain the maximum profit from the replenished variety, which is the key consideration. So, if you want to replenish your position, you should replenish strong stocks, not weak stocks.

4 Super dark horses that skyrocketed in the early stage will not be replenished

There were many leading figures in history who, after emitting a brief dazzling light, stepped into the darkness of the long night. For example, some stocks have a long period of decline, often experiencing a deep drop followed by a deep drop and a deeper bottom after reaching the bottom. Investors who spread out these stocks will only get more and more mixed up, and the deeper the mixed up, the deeper they will eventually get stuck in a quagmire.  

5. Seize the opportunity to replenish inventory

Seize the opportunity to replenish inventory and strive for success in one go. Never replenish inventory in segments or levels. Firstly, ordinary investors have limited funds and cannot afford multiple leveling operations. Secondly, replenishing a position is a remedy for the previous erroneous buying behavior, and it should not become a second erroneous transaction in itself. The so-called step-by-step replenishment is a defense for imprudent buying behavior. Multiple restorations, the more you buy, the more you end up in a situation where you cannot extricate yourself.

6. Incremental replenishment method can be used

That is, the replenishment is done in batches, but the amount replenished each time is not the same, and it increases step by step, showing an increasing trend. It can be increased in equal increments, such as increasing by 10000 yuan each time (10000 yuan for the first replenishment, 20000 yuan for the second replenishment, 30000 yuan for the third replenishment, 40000 yuan for the fourth replenishment, etc.), or by multiples, such as doubling the quantity of the last replenishment compared to the previous one (10000 yuan for the first replenishment, 20000 yuan for the second replenishment, 40000 yuan for the third replenishment, 80000 yuan for the fourth replenishment, etc.). The characteristic of this method is that the risk is small but the opportunity is also not high.

What should I do if individual stocks in the market rise after filling in 7 positions?

If the index and individual stocks are in a relatively bottom area, it is possible that the market has just started, and the stocks that have been replenished are held still, while the funds that have not been replenished continue to increase their positions (by appropriately raising the replenishment price); If the nature of the market belongs to oversold rebound, the replenished positions should be taken for profit when the overall market and individual stocks rise, and those that have not been replenished should continue to wait for opportunities.

What should I do if a stock in the market falls after filling in 8 positions?

We must adhere to the plan and avoid being flustered; Secondly, it is necessary to control the upper limit of replenishment for a single variety. Once the replenishment quantity of a certain variety reaches or approaches the upper limit, replenishment should be stopped and replaced with other varieties to prevent individual stock risks.

Ultra short term discipline, continue to buy within the daily limit up for ultra short periods, and sell without the limit up the next day; Or hold shares according to the 5-day line. Adjust your mindset, don't ask if you can catch up when it rises, and ask if you want to cut when it falls. Operate on yourself, everyone's mode is different. (Strictly follow the principle of taking profits and stopping losses based on the 5-day and 20 day lines)