Smart stock investors can gain short-term profits by rebounding from a downward trend, but many of them fail to grasp the rebound and end up being trapped. Why is that? This type of stock investor friend has not mastered the skills of grabbing rebounds. Participating in grabbing rebounds is indeed a very risky thing. If they grab well, they can make profits in the short term, but if they don't grab well and fall into traps, they may have to cut their own flesh.
So what are the techniques for grabbing rebounds?
1. It is very important to choose stocks for a rebound, usually by selecting some oversold stocks. These stocks have a deep decline in stock prices, but their fundamentals are good and are affected by the weakness of the overall market. The rebound momentum accumulated by these stocks is very strong, often leading to strong upward trends.
The types of rebounds mainly include: technical rebound, oversold rebound, retaliatory rebound, pulse rebound, relay rebound, and induced rebound. We try to avoid participating in pulse rebound and relay rebound as much as possible; Technical rebound and induced rebound need to be judged based on the market situation at the time and the substantive role of the positive news that triggers the rebound; For oversold rebounds, it is more suitable for investors to participate.
3. Seize the rebound, stop when it's good, don't be greedy, focus on short-term trading, fast in and fast out. Do not set profit targets, be sure to control risks within a certain range, and sell decisively when stock prices slow down.
4. Technical analysis is particularly important in the operation of a rebound market. It is not only necessary to determine the nature of the rebound based on technical factors before participating in the rebound, but also to grasp the timing of selling based on technical analysis even after the operation. When using technical analysis, it is important to focus on overbought and oversold indicators. If you send an overbought signal, you can consider buying. Once you enter the overbought zone, you should pay attention to selling at any time to make a profit.
Grab the rebound. If you don't do this, you'll die a miserable death
Grab the rebound. If you don't do this, you'll die a miserable death
For investors, how to enter the stock market to buy bottom and rebound is a more profound issue. Rebound refers to the phenomenon where the stock price temporarily rebounds due to the rapid decline in the market, supported by the buying side. So how can we accurately seize the rebound and make profits in the rebound market?
Grab the rebound and see the 5 laws
1. Conversion law:
A rebound may not necessarily evolve into a reversal, but a reversal must evolve from a rebound. However, in a downtrend, there is only one rebound that can be converted into a reversal, and the other multiple rebounds will trigger even greater downturns. Investors who rush for a rebound in order to seize the opportunity for a reversal are often trapped in the middle of a decline, so they must not treat a rebound as a reversal.
The law of timing:
The timing of buying should be patient, and the timing of selling should not be delayed. The operation of grabbing a rebound is different from that in an uptrend. In an uptrend, it is generally necessary to wait until the rally has ended and the stock price has stopped rising and fallen before selling. However, selling in a rebound trend should not wait until the rally is about to end. In the rebound operation, it is important to emphasize early selling, and generally take decisive profit taking after making a profit.
3 Decision Laws:
Investment decisions are primarily based on strategy, supplemented by forecasting. The trend development of rebound market is often not obvious, and the variables of market development are large, making it difficult to predict. Therefore, participating in rebound market should be mainly based on strategy, supplemented by prediction. When the investment strategy conflicts with the investment prediction, buying and selling decisions should be made based on the strategy, rather than relying on the predicted results.
4 Laws of Elasticity:
The stock market falls like a ball, the more violently it falls, the faster it rebounds; The deeper the drop, the higher the rebound; The rebound in a slow decline often lacks vitality, participation value, and operability; The retaliatory rebound and oversold rebound during a sharp decline have certain participation value and operability because they have a certain profit margin for rebound.
The 5 laws of grabbing points:
To grab a rebound, you must grab two points: buying points and hot topics, and neither can be missing. Due to the short duration of the rebound, there is limited room for upward movement. If you are not sure about the appropriate buying point, you cannot rush to chase after the high price, so as not to fall into the trap. In addition, there are always obvious hotspots in the rebound market that are worth participating in, and the main funds often use these sectors as the fulcrum to initiate the rebound. Usually, hot stocks have strong upward momentum. In the rebound market, investors can only truly seize the short-term profit opportunities of the rebound by grasping such hotspots.
Six key points to note!
1. Determine the rebound environment.
If investors want to participate in the rebound operation, they first need to determine whether the buying and selling environment of the rebound they will participate in is a bull market stage or a bear market stage. Generally speaking, it is best not to participate in the operation of rebounding, as rebounding is like "licking blood with a knife edge". In the bull market stage, one can choose the appropriate timing and methods to operate in order to reduce holding costs and expand profits.
The most likely time for a rebound to occur.
Rebounding usually occurs in:
At the end of adjusting the wave; Important golden ratio position; The internal trajectory of long-term, medium-term, and short-term trend channels; The stock price has fallen back into the historically trading intensive zone; The technical indicator KDJ shows that the stock market is severely oversold; After three consecutive days of bearish candlesticks on the candlestick chart.
3. Grasp the buying points for rebound.
Not all opportunities that are prone to rebound are suitable for market operations. Investors should consider in advance the likelihood of successful operations and their own risk tolerance.
Characteristics of the rebound day:
On the day of the rebound, the stock price usually starts low and goes low, and the stock price declines all the way. About an hour before the afternoon closing, the stock price begins to gradually rise with a certain slope, and around a quarter of an hour before the closing, it sharply rises in the late trading session. There is a long lower shadow on the daily candlestick chart, indicating a rebound.
The characteristics and operations of the rebound the next day.
The trend of the day after the rebound is the key to the success or failure of the rebound.
The opening price should be high, and it should be high or volatile. If the opening price is high, it indicates that investors have the intention to chase after it; otherwise, it indicates that investors do not have the intention to chase after it. At this point, the rebound is generally not successful, and all stocks should be cleared when the rebound price returns to the opening price. If the stock price falls below the opening price after a high opening and then falls back, it is necessary to observe that when the stock price rebounds again, it must exceed the previous high point, and when it falls back again, it cannot fall below the opening price again. If it cannot exceed the previous high point to form a double peak or fall below the opening price twice, the stock should be sold at the high point price; Quantity price coordination, both quantity and price increase. If both quantity and price cannot increase, the rebound will fail, and one should seek opportunities to sell stocks.
6. Grab the rebound shipping time.
Pay close attention to the market opening. If the market is improving, it may indicate the occurrence of a reversal, and you can continue to hold shares. If the market continues to be weak, it is advisable to find a high point in the rebound and sell. Usually, it may not be possible to sell stocks at the ideal price, and one should regret it and not hesitate to avoid being trapped.
Top 10 risk points that must be mastered
1、 It is not advisable to rush for a rebound in a situation of killing more. When there are significant changes in policy or fundamentals in the short term, it can have a sudden impact on stock indices and individual stock prices. If various investors in the market are mostly anticipating a good market trend without any preparation for negative news, and happen to be in a situation where there are many profit taking orders and a certain amount of short selling momentum has been accumulated, it will lead to a concentrated surge of sell offs, causing the market to evolve into a long kill situation. The destructive power of a market downturn in this situation should not be underestimated, and investors should not rush for a rebound. We need to patiently wait for the basic release of short selling momentum before considering the next direction of operation.
2、 Overloaded positions are not suitable for rebounding. Due to the long period of stock market adjustment in recent years, which has set a record, the depth of the adjustment is also shocking. Most investors have suffered varying degrees of losses, and it is common for heavy positions to be trapped. The rebound market is a normal phenomenon of twists and turns in the downward trend of the stock market, and the vast majority of rebound markets will continue their original downward trend after the end. Therefore, when fighting for a rebound, it is necessary to control the proportion of funds invested, neither heavy positions nor full positions. If investors with already heavy positions rashly participate in the rebound market, they will easily face a passive situation of being completely trapped. Therefore, investors with heavy positions and deep traps should not rush for a rebound.
3、 Newcomers to the stock market should not rush for a rebound. Participating in the rebound market belongs to short-term investment behavior, which usually requires investors to have excellent investment mentality, as well as sharp judgment, decisive decision-making, and rich short-term investment experience. If you are a novice in the stock market or an experienced investor who is only good at long-term investment and not familiar with short-term speculation, you often experience delayed decision-making, inaccurate trading, and untimely stop loss in actual operations. Not only is it difficult to obtain short-term returns from a rebound market, but it can also easily lead to repeated investment mistakes.
4、 It is not advisable to seize a rebound without setting a stop loss. The rebound market not only provides opportunities for speculation, but also indicates that the market has not yet fully strengthened. When participating in the rebound market, we should adhere to the principle of safety first and profit second. When actually intervening in stock speculation, it is necessary to set a stop win level and a stop loss level. When the stock price reaches or falls to the predetermined level, immediately make a decisive move to sell, and never let the proactive rebound operation evolve into passive medium-term or long-term stock holding.
5、 Weak establishment is not suitable for seizing rebound. When the market is in the early stages of a bear market, there is still significant room for further decline in the future; Alternatively, when the market trend is running in a clear downward channel and the market is extremely weak, it is not advisable to rush for a rebound. Because at this time, investors in the market are trying to sell off during a rebound. The height of the rebound market is limited, the duration is short, the operability is poor, and the risk is not small. Once it returns to a downtrend, there will be a more serious downtrend. From the perspective of risk return ratio calculation, this is very uneconomical.
6、 Pulse market is not suitable for rebounding. When participating in a rebound market, attention should be paid to the nature and level of the rebound market, especially the possible duration and strength of the rebound market. For short-lived rapid rebound markets and small wave markets with little increase, investors should mainly maintain a wait-and-see attitude. The profit margin of this type of rebound is very limited and the operability is poor, thus lacking the value of participation.
7、 It is not advisable to rush for a rebound when there is a large volume of decline. When the stock price has been continuously declining for a long period of time and the market is nearing its end, it is advisable to choose stocks with unlimited short positions to rebound, rather than stocks with large volume declines. Because there is almost no selling pressure on stocks with unlimited short positions, the sustained decline of unlimited positions is mainly due to deliberate suppression by market makers or being dragged down by the extreme downturn of the market. Once the overall trend stabilizes and rebounds, stocks that have previously experienced unlimited short positions often show great elasticity due to light upper range selling pressure, making it relatively easy for investors who choose such stocks to make profits. However, most of the stocks that have experienced continuous volume declines are driven by market makers, leaving layers of trapped stocks in the upper tier, making it difficult for them to rebound.
8、 It is not advisable to seize a rebound when stock prices are resistant to decline. When fighting for a rebound, it is advisable to choose stocks that have experienced oversold. Anti falling stocks may perform relatively well during a certain period of decline in the stock market. However, if the stock index experiences another downturn, they will adopt a cost free shipping method due to factors such as financing time costs and broken capital chains. At this time, the decline of such anti falling stocks after breaking the level will be much greater than the decline of the stock index during the same period.
9、 It is not advisable to seize the rebound of controlling old and traditional Chinese stocks. This type of stock, whether or not it has experienced a deep correction, is not suitable for rebounding, because after long-term operation, the cost of controlling the stock is extremely low for the market makers. Even after a significant drop, the market makers still have huge profits to make. For example, since the launch of the "5.19" market in 1999, XCMG Technology has been rising until the first half of this year. If calculated based on the actual exercise price, the stock price has already risen tenfold. This phenomenon is also common in recent years' diving stocks, so investors should keep a distance from these types of stocks and not risk taking profits out of the fire just for the sake of unattainable profits.
10、 When the risk exceeds the return, it is not advisable to rush for a rebound. Before participating in a rebound market, it is necessary to estimate the risk return ratio. When the risk of a stock's rebound market is much greater than the return, it is not easy to seize the rebound. Only when the expected return is much greater than the risk, is it suitable to seize the rebound. In addition, it is also important to pay attention to the overall market. Only when the upward potential of the market far exceeds the downward potential, is it appropriate to seize the opportunity for a rebound.
