The daily limit up indicates a strong trend in stock prices, especially for stocks that have continuously hit the limit up, which can yield substantial profits in the short term. However, after a significant increase, they often experience a sharp drop. Therefore, participating in the daily limit up stocks not only brings high returns but also carries high risks. Through the analysis of stocks that have hit the limit up in the past two years, it can be found that stocks that hit the limit up tend to rise the next day. According to some statistics, the average increase on the highest point of stocks that hit the limit up the next day is 5.92%. Therefore, if short-term intervention is made in stocks that hit the limit up, the average return on the next day is also much higher than that of the secondary market. How to choose stocks that hit the daily limit up? When participating in limit up stocks, short-term trading should be the main focus, and low-priced and small cap stocks should be chosen as the main option. Once these stocks reach the limit up, they can often form a sustained upward trend, and the best circulating stock is between 30-80 million shares. It is difficult to continue to rise after the limit up of medium and large cap stocks.
From the timing of intervention, the earlier a stock's limit up time leaves the market, the better the next day's trend. If a stock reaches the limit up before the closing, the next day's trend is not ideal. Moreover, most individual stocks always have an opportunity to open the limit up board during the trading session after reaching the limit up, and the best intervention time should be the moment when the limit up board is closed again.
When buying limit up stocks, the following points should be noted:
1. Observing the strength of the market, especially in extremely strong markets where around 5 stocks hit the daily limit up, it is important to boldly follow the limit up board. A very weak market must not catch up with the daily limit up.
2. The form before the limit up is better, such as a new stock that has been listed for a few days with a slight consolidation, or suddenly jumped short and opened up at the limit up on a certain day; Or the stock selection price has been consolidating at the bottom for a long time without a significant increase in the bottom stocks; Or strong stocks that end their consolidation at the end of the consolidation period and hit the limit up.
3. If there is a volume that can cooperate, and if you find a volume of three or more digits pushing towards the limit up during the trading session, you can immediately catch up.
4. Search the price increase ranking list in a timely manner during the trading session, and review the current price, previous trend, and circulating size of stocks close to the limit up to determine whether they can be used as intervention targets. When the increase exceeds 9%, be prepared to buy to prevent large orders from hitting the limit up and not being able to buy.
5. The trading volume released by the chasing stocks on the same day should not be too large, usually 1-2 times that of the previous day, and can be easily calculated half an hour after the opening of the day.
6. Having appeal, the entire sector is launched, and we need to catch up with the leaders who hit the daily limit up first, especially in bull markets or extremely strong markets. During a period of market downturn without a limit up, if there is a strong rebound or reversal to catch up with the first limit up, the stock is likely to be the leader in the future, and even if it rebounds, the strength will be much greater than other stocks. The timing for selling limit up stocks can be to sell them when the 5-day moving average is flat or turns, or to sell them immediately when the red bar in the MACD indicator is shortened or flat. If the stock price reaches the limit up again around 30 minutes the next day, boldly hold it. If it does not reach the limit up the next day, it can be immediately sold when the stock price platform adjusts for a few days after rising for a period of time, or it can be sold when it rises the next day. If the stock does not rise within three days after catching up, it should be sold out to avoid delaying the opportunity or being deeply trapped.
Attention: Participating in the daily limit up generally has a good effect in the early stage of market launch, but mistakes are prone to occur in the later stage.
How to buy stocks on the daily limit up board and minimize the risk of stocks chasing the limit up board
Theoretical basis: The introduction of limit up and limit down is a product of preventing excessive speculation in emerging securities markets, with the original intention of preventing excessive market volatility. However, the limit up and limit down system actually serves two purposes: firstly, when the stock itself has a sudden surge of more than 10% (such as sudden major positive news or market reversal), it is forced to stop at 10%, and the next day, due to its own upward demand, it will continue to rise, which is a clear speculative opportunity; The second is that the limit up and limit down have a significant psychological impact on both parties buying and selling stocks. After the stock hit the limit up, for those who originally wanted to sell the stock, they will increase their psychological expectations and sell at a higher position. For those who want to buy, because they cannot buy it, they will also strengthen their determination to be optimistic about the stock and not hesitate to buy at a higher position. So, the limit up and limit down have a significant role in helping the market rise and fall. When a stock is about to hit the limit up, if you can timely determine that the daily limit up will be firmly sealed off and catch up immediately, then the high point that appears the next day will give you a very good profit opportunity.
Some investors say that the method of chasing the limit up board now has an impact nationwide, and market makers have also noticed it. Market makers will have to reverse this method in the future, and its usefulness will be reduced. Actually, it's not like that. Any market maker, if they hit the limit up today and get stuck, if they are currently in the selling stage, they must continue to rise tomorrow to create a strong attack at the high point and lure retail investors to chase after the rise, in order to slowly distribute at the high point. If they let the stock go low the next day and do not give those who hit the limit up yesterday a chance to profit, then this kind of stock movement will have a great impact on the enthusiasm of retail investors to chase after the rise. The market maker themselves cannot sell at the high point, and the trading volume cannot increase, so they cannot sell much. Therefore, the market maker must continue to rise and bear the profit taking of retail investors who hit the limit up yesterday. Otherwise, it will be a win-win situation for both retail investors and the market maker to chase the limit up. The situation is severe, and the losses suffered by the market makers are particularly heavy. If the stock itself is at a low level when the limit up is reached and the market maker is still in the stage of building positions, then there are only two outcomes: either the market maker continues to raise and buy chips, giving retail investors the opportunity to profit from chasing the limit up, or quickly lowers the stock price, taking the risk of some mid-range retail investors being bought on dips grabbing chips or being robbed by others. A friend said that the market maker has now realized this issue and decided not to raise the limit up in the future to get rid of this awkward situation. In fact, this viewpoint is fundamentally untenable. Firstly, market makers often need to raise the limit up to open up the situation, especially when they need to sell, so there is no possibility of the limit up disappearing in the future. Taking the overall market since July as an example, in such a weak market situation, the limit up has been almost daily, and there are still many opportunities.
Nowadays, many stock market makers have realized this problem, and investors can take two ways to deal with it: one is to quickly catch up with the market makers' buy orders when the limit up is closed, so that retail investors do not have buying time. If retail investors want to buy, they must be quick witted and not hesitate at all, which requires a high level of technical and viewing skills from retail investors; Another approach is to barely raise the limit up when the stock's technical form is not good, but not lock it up and slowly sell at the limit up position. Even if it closes at the limit up, it cannot go much higher the next day. In this situation, the banker's choice is very wise. If their technical form is not good, they should ship. However, if their technical form is good, based on our own observation, the banker basically adopts the first method. It can be seen that the way the banker responds is still based on maximizing their own interests.
