In a rising market, the magnitude and speed of the rise or fall of sectors and stocks vary. For the same rising market, the different stocks held by investors will directly affect the amount of investment returns.
The start of a rising market trend is always initiated by one or several sectors taking turns to rise, forming a local or comprehensive profit-making effect. Attracting external funds to continuously intervene, achieving a situation where everyone gathers firewood and flames high.
1、 The formation of one or several leading sector stocks generally involves the following steps
1. The stock value is undervalued by the market and has been neglected and undervalued for a long time;
2. Value is discovered, and there are strong signals in public opinion or policy direction;
3. Value return hype;
4. Overvalued, forming bubbles;
5. Value return, stock price accelerating decline.
A sector needs to become the leading sector in a market trend because its overall market value is undervalued and its stock price is generally low. The sector has similar or identical themes or concepts, which can easily trigger investors' imagination and stimulate their interest in the theme or concept. The inflow of main funds naturally leads the stock price to rise ahead of the market.
The emergence of a market hotspot cannot be separated from the promotion of policies and public opinion. To seize the leading sector in the first place, one must listen to all directions and observe all directions. The changes in policies are the main driving factor determining the formation of market hotspots. The key to whether a market's hype hotspots or several hotspots can have a wide public base depends on whether this hype hotspot conforms to the current policy core spirit. When one or several leading stocks rise significantly, and public opinion disagrees with this, it sends a signal that their value is excessively overvalued by the market. The leading stocks will experience "stagflation" or a massive decline, indicating that the overall speculation of the leading stocks has cooled down or receded. Holders should promptly and decisively sell to avoid risks.
2、 The leading sectors often have the following market characteristics in the early stages of launch:
1. The introduction of favorable policies or media coverage of certain policies or economic hotspots.
2. In the long-term sluggish market situation, leading the way in bottom volume, large proactive buying orders continue to appear in the detailed trading record table of a certain stock. This sector's stocks rank among the top in terms of gains, and stimulate individual stocks with the same or similar themes or concepts to rise. The trading volume is large, and the transaction amount shows a trend of price increase and volume increase, ranking among the top in the detailed trading record table of capital flow;
3. At the start of the leading sector stocks, there is often a high jump opening, rapid rise, short-term surge in trading volume, and large buy orders blocking the limit up;
4. Market investors generally hold a wait-and-see or skeptical attitude;
5. Market comments have started to focus on the leading board, and with the upward trend of the leading sector stocks, comments have also begun to heat up.
Having the above 5 trading characteristics can almost certainly lead to the initial formation of a rising sector.
At the beginning of the formation of the leading sector, investors need to buy quickly, accurately, and ruthlessly in a timely manner. If they do not have the courage to chase high and buy, they will miss the opportunity! Sometimes one even needs to have the courage to chase the limit up and buy. Capturing the leading sector stocks requires decisive buying courage and a strategy of daring to be the first in the world.
3、 Method for determining the leading sector of gains
1. Looking at the price increase chart: If a certain sector's individual stocks occupy more than 5 of the top 20 in the price increase chart and this situation occurs continuously for a period of time, it can be preliminarily concluded that the sector has started.
2. Looking at trading volume: If the number of stocks in a certain sector accounts for more than 5 out of the top 20 in trading volume, and this situation occurs continuously for a period of time, it proves that the sector has main funds active and has a high possibility of continuing to rise.
3. Look at the trend: Select 5-8 representative individual stocks from high priced stocks, medium priced stocks, and low priced stocks, and compare their strength and weakness. If the number of individual stocks in a certain sector has a stronger trend than the other two sectors, then this sector is the starting sector we are looking for.
As the new year approaches, we must learn from our mistakes and summarize our experiences. The stock market is actually a psychological war, whoever can grasp the rules and follow them will become the big winner in the stock market. Some people say that failure is the mother of success, but in fact, experience and lessons are the true mother of success. The plan for the year lies in spring. Don't rush into battle yet. What's needed is calm thinking and sufficient preparation. We need to learn the technical and fundamental aspects, but more importantly, we need to learn the concepts and follow the rules of the stock market.
Firstly, don't take the market too seriously. We are buying and selling individual stocks rather than the overall market. It is meaningless to study the overall market excessively. Individual stocks will always rise and fall. What we need to do is to conduct sufficient research on the individual stocks we hold or value, using the overall market as a reference for risk control. From my Weibo posts, it can be seen that I am most focused on buying and selling points for individual stocks, while the overall market only looks at strength and weakness. Buying a strong point=heavy position trading, buying a weak point=light position trading or wait-and-see.
Secondly, forget about your own warehousing costs. Many stock investors always tell me how much money I bought, whether I made a profit or lost, when they ask me whether I should lose or keep my stocks. It seems that in their view, how much they earn and how much they lose can influence the rise and fall of stock prices. Always focusing on one's own costs will lead to overlooking the risks of the stock market, forgetting the patterns of stock price fluctuations, self comforting, and not buying or selling at high and low points in a bull market. Forgetting your warehouse building costs is to analyze the rising and falling trends of stock prices more rationally, just like forgetting the starting point on a sports field, in order to have more motivation to reach the finish line.
Thirdly, survival is of paramount importance in the stock market. Stock investment is actually like adding water to a bucket. If the bucket is intact, even if only a little bit is added each time, it won't take long to fill it up; If there is a bowl sized hole under the bucket that leaks while adding water, no matter how quickly your pipe is filled with water, it is impossible to fill it up; If your bucket leaks faster than you can add water, the water in the bucket will eventually drain out. To fill the bucket up, the first thing to do is not to enlarge the pipe, but to fill the leaking bucket. This is the leaky bucket theory. Simply put, the first step is to learn how to stop losses, and the second step is to learn how to control one's desires. Almost all experts' stock trading advice is to try to preserve your capital as much as possible. Survival is the most important thing in the stock market, and your ability to make money is definitely better than your ability to lose money.
Fourthly, it is the ancestor who can empty the warehouse. If you feel that stocks are difficult to operate, hot topics are difficult to grasp, and most stocks have fallen sharply, the stocks on the rising list have little increase, while the stocks on the falling list have a large decrease, then you need to consider short positions. At this point, analyzing the stock market is no longer about analyzing its ups and downs, but rather analyzing whether it is suitable for operation. If it is not suitable for operation, even if the market is still rising, it is necessary to decisively sell. The reason for empty positions is not due to fear, but to preserve living power; The purpose of holding a short position is not to avoid, but to gain a clear understanding of the ups and downs of the stock market from an outsider's perspective. Therefore, there is a saying that goes, 'Those who can buy are disciples, those who can sell are masters, and those who can empty their warehouses are grandmasters.'.
Fifth, individual investors should engage in "guerrilla warfare" and "protracted warfare". As retail investors, we need to analyze both our strengths and weaknesses. Our limited funds, lack of information, limited analytical abilities, unstable mentality, frequent mistakes, and lack of discipline all determine that we as retail investors can only engage in guerrilla warfare and protracted warfare. Guerrilla warfare emphasizes flexibility, while protracted warfare emphasizes steadfastness. The combination of the two is believed to reveal immense power.
Sixth, respect the rules. Every game has its own rules, and the stock market is also a game. To become a super player in the stock market, one must demonstrate their skills while following the rules. Simply put, the stock market is actually a zero sum game, where short-term imbalances are for long-term balance. The ups and downs of the stock market are regular, but most people have not noticed it. Even if we find a pattern, if it is detrimental to our current operation, we will turn a blind eye to it. Especially in the operation of individual stocks, this is the case. The buying and selling points of individual stocks have rules and techniques, but you just haven't mastered them. Today, I criticized the student for always being unable to change the previous trading mode of losing money and incorrect judgment skills. The rules of individual stocks lie in your selling points, which are unrelated to anything else. Don't be misled by many fallacies, such as chasing the rise and killing the fall, buying more and more, buying on dips, etc.... Winners focus on the rules, losers are surprised, and in order to survive in the stock market in the long run, they must follow the rules. For most rising stocks, the upward trend is rarely one-sided, and there is often a period of oscillation and consolidation during the upward movement. At this time, due to the fact that their stock prices have already risen to a certain extent, there is sometimes a possibility of turning downwards. From the perspective of investors' actual operational methods, they often love to chase after high prices when participating in hot individual stocks. When a stock experiences a correction, the market price will be closer to the cost price of participation. Therefore, it is necessary to accurately determine whether the stock price decline is a wash up or an institutional escape to build a head. For this issue, we can obtain relatively accurate conclusions through changes in trading volume.
From a general technical perspective, the volatile trend of market washing is largely similar to the trend of building the top, which investors often find difficult to distinguish. However, the differences between the two can be seen from the following aspects: firstly, there are differences in the early gains before entering a high-level oscillation. Generally speaking, the oscillations that build the head have limited maximum gains in the most recent uptrend, while the oscillations that belong to the wash nature have a considerable increase in the most recent uptrend. After experiencing a significant uptrend, individual stocks often do not immediately form a head, and those stocks that start to rebound shortly after launch are more likely to enter a sustained downward channel; The second difference is the variation in trading volume. In the case of price limits, when the stock price falls, transactions will show a shrinking trend, but the volatility of market washing will maintain a high level of transactions. If a shock is a large volume decline, the probability of market washing is extremely high. On the contrary, for varieties with continuous shrinking and falling transactions, the future trend of their stock prices needs to be cautious; The third is the magnitude of the decline. Generally speaking, the extent of a pullback and decline in individual stocks undergoing market washing is limited, with a maximum drop of 10% to 15%. If it exceeds this range, it will inevitably lead to a downward trend at the top.
In practical operation, investors can grasp the following principles: when a stock with a large increase experiences its first significant decline, it is often not the head, and the subsequent volatility of the stock belongs to the nature of market washing. Especially when the trading volume remains at a certain level, there is a greater possibility of the stock being liquidated. On the contrary, stocks that have experienced fluctuations and have not shown strong performance in recent increases, and whose trading volume is difficult to sustain amplification, are more likely to build a leading position. The first callback of strong stocks with constant strength is worth participating in and being optimistic about during dips. The purpose of the banker's shake up is to try to shake off those who are not determined to follow the trend. The purpose of the dealer's shipment is to attract buying as much as possible, stabilize the confidence of other shareholders through various means, while distributing as many stocks as possible at the highest possible price.
It is crucial to distinguish between the two, as it directly affects your profit margin on this particular stock. But in practical operation, many investors treat the shaking positions of the market makers as selling; The shipment was a shock to the warehouse, and the stocks sold skyrocketed all the way, while the stocks that were heavily held back fell repeatedly, deeply trapped. So much so that in addition to causing economic losses, it also has a significant impact on investment mentality. The difference between dealer shipments and overstocking:
Pan mouth aspect
When the dealer ships, they do not place large sell orders on the selling list. If you buy a DSLR below, the display will be relatively large. Create the illusion of a high buying volume (or no large buy orders below), but there is an endless supply of goods at a certain price point above, or there are often large sell orders in the transaction details but weak buy orders, resulting in the price sinking and unable to rise.
When the market maker shakes its position, there are large sell orders hanging on the sell list, creating the illusion of high sell volume. If the market maker is unable to distinguish whether the stock price is shaking or selling when it falls, but at the key price point, there are large selling orders and although there are not many buying orders, the buying speed is fast and the number of transactions is large, but the stock price no longer falls, it is mostly shaking.
In terms of K-line morphology
Analyzing the daily candlestick pattern, it is more crucial for market makers to determine whether they are selling or shaking their positions. The market maker's consolidation of positions is only to shake off the weak follower market, not to scare off everyone (otherwise the market will have to buy more chips). It must ensure that some determined investors still have a positive outlook on the stock, continue to follow it, and help it lock in chips. So when it shakes its position, some key prices will not fall below, and these prices are often the starting position of the last shake up. This is because the price that has already been washed out last time does not need to be washed out again, which means that the person who was shaken out last time will not have a price difference for short covering. This results in a very obvious layering phenomenon in the K-line shape.
The primary purpose of the market maker's shipment is to try to sell a large number of stocks in their hands, so the key position will not be guarded. Causing the K-line price to spiral out of control, without any hierarchy, blindly falling.
In terms of center of gravity
Whether the center of gravity has shifted downwards is a significant indicator for distinguishing between shock storage and shipment. The shaking position of the market maker is to make the graphics look ugly, but they do not want others to buy cheap goods. Therefore, regardless of whether the daily candlestick closes with dark clouds, large bearish candlesticks, long shadows, cross stars, or 4 or 5 consecutive bearish candlesticks or even more, the center of gravity never shifts downward, that is, the price always remains unchanged. Although the dealer's shipments sometimes make the pictures look better and receive a lot of positive results, the focus has always shifted downwards. In the process of short-term trading, there are some fundamental issues that cannot be violated, which are also a major taboo for military strategists. Short term stock selection follows the following five principles in order to achieve the ideal state of "rising as soon as you buy, falling as soon as you sell".
1. Trend rule
Before preparing to buy stocks, it is important to have a clear understanding of the overall market and individual stock trends, and then select short-term stocks based on these trends.
Generally speaking, the vast majority of stocks follow the trend of the overall market. When the market is in an upward trend, buying stocks is easier to make profits. For example, during the major rebound that began in early July 2010 last year, the upward trend was evident, increasing the success rate of short-term stock selection. Buying at the top is like pulling out a tiger's tooth or licking blood with a knife's edge. Buying during a downtrend is difficult to survive, and there are not many opportunities to buy during trading. For example, in the downward trend of the stock market that began in April this year, the success rate of short-term stock selection is much lower. In addition, it is necessary to develop investment strategies based on one's own financial strength, whether to prepare for medium - to long-term investment or short-term speculation, in order to clarify one's operational behavior and achieve targeted goals.
In addition to the overall trend, the selected short-term stocks should also be stocks in an upward trend, preferably strong stocks.
2. The Law of Dominance
The strong always remain strong, and the weak always remain weak "is an important rule of short-term stock investment. According to this rule, we should participate more in strong markets and invest less or no in weak markets.
Only strong stocks can avoid the risk of a decline in the overall market. In fact, it is difficult to predict the overall market index, especially during the consolidation stage, because the overall market index is not real and is calculated as a weighted average of all individual stocks. The changes are very complex, and even some high positions may not have high accuracy in predicting the overall market. By using strong stocks in the market, it is possible to improve the accuracy of predicting the overall market and avoid the risk of a market downturn. When the market is unable to select effective strong bull stocks, it indicates that the overall market has already or will soon begin to decline; After a period of continuous decline, when the market can select strong bull stocks, it indicates that the market has already or will soon begin to emerge from the bottom.
For example, after April this year, it is difficult for the market to select strong stocks that have hit the daily limit up for more than four consecutive times, indicating that the market has already or will soon begin to decline; For example, the recent emergence of strong stocks such as Tianzhou Culture 300148 in the market indicates that the market has already or will soon begin to bottom out.
3. Bottom Rule
The best time to buy stocks, whether in the short or medium to long term, is in the bottom area or in the early stages of the stock price breaking through the bottom and rising. It should be said that this is the time with the least risk. Although there are opportunities for short-term trading every day, it is important to consider changes in short-term bottoms and trends, and to fast in and out. 4. Subject matter rules
Unlike medium - and long-term investors, short-term investors are more concerned about whether stocks have a significant upward potential in the short term, and using thematic speculation has become a paradise for short-term speculation. So in order to achieve high returns, it is recommended that short-term investors participate more in theme stocks.
Although various themes emerge and transform quickly, they still have relative stability and certain regularity. As long as they can be grasped properly, there will be rich rewards.
When buying stocks, we should choose stocks with themes and give up stocks without themes, and distinguish between mainstream themes and short-term themes.
In addition, some themes are often speculated and new, such as the eternal theme of restructuring, which often stages the myth of "black chicken turning into phoenix", mostly stocks of loss making listed companies.
After announcing favorable plans, there is usually a continued upward trend; Some themes, on the other hand, are fleeting and can only be hyped up once, with a short period of hype and difficulty in gaining appeal in the future.
For example, the brightest sector in the market this week is undoubtedly media stocks. The strength of the media sector is mainly stimulated by favorable policies. The Decision of the Central Committee of the Communist Party of China on Deepening the Reform of the Cultural System and Promoting the Great Development and Prosperity of Socialist Culture, which was deliberated and passed at the Sixth Plenary Session of the 17th Central Committee of the Communist Party of China in Beijing on October 18th, pointed out the need to accelerate the development of the cultural industry and promote it to become a pillar industry of the national economy. The strength of the media sector is reasonable.
5. Risk Law
The stock market is a high-risk, high-yield investment venue. It can be said that risks are everywhere and always present in the stock market. As a short-term investor, one should always have risk awareness and minimize risks as much as possible. Stock selection is the first and important step in controlling risks.
When selecting stocks, in addition to considering the trend of the overall market, it is also important to focus on analyzing whether the stocks to be bought have a large upward or downward potential, where are the resistance levels in the upper range and the support levels in the lower range, and what are the reasons for buying? What if it doesn't rise but falls after buying? Wait, these factors should be clearly understood when selecting stocks, in order to minimize risks as much as possible.
One method is to develop good investment habits. Stock trading is about speculation, and one's temperament and habits will determine the success or failure of your investment. Many successful stock traders enjoy thinking and contemplating the gains and losses of success. Summarize the profits and losses of stock operations to ensure that the same mistakes are not made again in the future. Thinking is often ahead of time, and operations are not conservative.
Method 2: Don't treat stock trading as gambling. The biggest difference between gambling and investing or speculating in stocks is that whether gambling is big or small is purely accidental, without a certain pattern, and no one can answer why. Although there are some speculative factors involved in the rise and fall of stocks, they are ultimately governed by the laws of supply and demand. Stock trading and gambling are simply a matter of luck and cannot be compared.
Method 3: Do not choose stocks based on fixed thinking. The manifestation of "feng shui turning" in individual stocks is often seen in the stock market, and long-term weak individual stocks provide potential opportunities for investors to build positions. Due to long-term weakness, stock prices are relatively low, and with the participation of certain themes and main players, they are likely to be sought after by the market and continue to rise. On the contrary, stocks that have been strengthening for a long time provide opportunities for major market makers to reduce their weight and positions. Due to long-term strength, the stock price is relatively high, which may lead to continuous liquidation and continuous decline in the case of profitable market makers and participating speculators.
The law of "Feng Shui taking turns" provides us with an effective method to capture potential bull stocks, that is, when certain stocks are in a long-term slump and their trading volume is increasing, they may become a big dark horse in the future by going against the norm and continuously strengthening. Therefore, during the process of market adjustment, paying attention to absorbing long-term weak stocks that have increased in volume and strength will provide us with new stock selection ideas.
Method 4: Do not blindly rely on hearsay. Many stock investors like to inquire about news, especially when choosing stocks, they pay special attention to insider information. Once you hear news that a stock will rise for some reason, you will definitely pay special attention. Especially when the stock price keeps rising, one becomes very convinced and impulsively buys the stock. Even at the cost of violating the creed of "not chasing the rise" and buying high, they use news to console themselves after being trapped. When there is a sharp drop for a period of time, it is even more important to use news to explain one's unwillingness to stop losses, so the opportunity to stop the decline keeps flowing in the face of so-called news, and the final result is of course very tragic. Every speculative market is filled with news, including both true reports and false information, as well as various seemingly plausible rumors and hearsay. These news directly or indirectly affect the continuous fluctuations of speculative market conditions, and stock trading cannot be based solely on news.
Method 5: Buy stocks and observe trends. There are many stock investors who have the misconception of "liking low and disliking high" in stock trading. I like to look for low-priced weak stocks when buying stocks, but I dare not buy high priced strong stocks; Looking for dark horses likes to look for stocks that are lying low in volume, but dare not find stocks that break through resistance areas and continue to strengthen, let alone chase after individual stocks that are in an upward channel and continue to strengthen. Stock investors who suffer from "fear of heights" often want to "buy the bottom" and are unwilling to follow the upward trend. Seeing the stock price rise, they desperately search for low-priced stocks; I dare not intervene in the stock market when I see strong stocks, but I choose to look for weaker stocks with lower prices to buy. Knowing that the current market trend is focused on high priced resource stocks, but having to search for low-priced stocks that have not yet been launched.
The emphasis here is not on blindly searching for high priced stocks and chasing after strong markets. But once the market tends to strengthen or hot and strong sectors emerge, one should 'sell when it's time'.
Method 6: Find the best stock trading method that suits oneself. Some people prefer short-term trading, while others say that long-term trading is gold; Some people believe that technical aspects are important, while others focus solely on fundamental analysis. In fact, no matter which analysis method or operation technique is used, there is no absolute right or wrong. What you think is a pile of junk stocks applied to others may be a dark horse for making money. It is important to choose the most suitable investment method based on your personality, abilities, psychological resilience, and mental qualities.
Method 7: Control your stock trading emotions. In stock investment, the true investment elements include money, time, mentality, and experience, understanding of the laws of stock movement, investment philosophy, and operational strategies. In the stock market, exciting things can happen every day. In the face of sudden changes, one must learn to control their emotions, remain calm and handle them calmly, otherwise they will eventually be "shaken out".
Learn to control your emotions and make a plan in advance to determine when to settle for profit and when to make a mistake and recognize losses. The profit and loss are within expectations, the psychological resilience has increased, and emotions naturally stabilize.
Method 8: Investment philosophy should not be too singular. At present, some investors are repeatedly playing games in so-called undervalued stocks, which not only consumes the market's long power, but also excludes many new opportunities. Therefore, the current challenge for market investors to go long is not policy risk, but rather the stock selection risk caused by overly simplistic investment concepts and deliberate pursuit of value investing. The investment philosophy is not absolute. A mature market can provide opportunities and space for different ideas. We should support Buffett's value investing paradigm and also allow Soros' speculative philosophy. Our market philosophy is rich and diverse, which is what makes a mature and healthy stock market.
