Whether to buy stocks when they rise or when they fall is a seemingly complex technical question, but once you master the method, the operation is not as complicated as those "writing technicians" who specialize in gaining attention effects claim.

There is no absolute right or wrong to buy when it rises or when it falls. Both methods have their advantages and limitations, and have specific applicability. Let's discuss three stock buying methods below:

Going with the flow trading: The important principle of the technical school is to go with the flow trading. When you find that the upward trend of a certain stock is clear, you first buy one-third of the predetermined investment amount. If you buy and then the stock rises, it means that you have correctly judged the trend direction, and you can continue to add funds to buy the stock in batches.

If the price drops after buying, it means that the buying operation is wrong, and you should not continue to add stocks to expand the error. When the price drops by more than 3% -5%, immediately sell the stop loss.

Of course, even if you buy a stock with a clear upward trend, as a retail investor, you should be wary of the main force secretly holding positions at the high point, while raising the stock price to attract retail investors to buy, and selling the stock at the same time. You should set your own selling position, such as selling everything after a continuous rise and then falling three points, to prevent the main force from falling sharply after exiting the position. You must have determination, don't see yourself selling stocks and then realizing that they are rising again, and can't resist the temptation to catch up. In this way, it usually ends up in a miserable situation. Remember, you must have determination and not be too greedy.

Buy on dips: If you are a value investor, you should choose to buy stocks in batches during a downturn. The premise is to make accurate analysis and calculation of the company's valuation, with a sufficiently low buying point, leaving enough margin of safety, and a sufficient gap between the buying prices of each level. The most tragic thing is that one thinks they are buying at the bottom, but after several rounds of buying, there is still a significant decline.

In the early stages of a bear market and at the top of individual stocks, the most taboo thing is to buy more as the market falls. When a large number of retail investors see a decline, their first reaction is to increase their holdings and spread the cost. This instinctive impulse, like a moth catching a flame, may come from their experience of buying cheap goods in daily life. Blindly buying more and more stocks without judging their valuation and price range like this is a wrong operation method strongly criticized by Li Wumo.

The premise of buying more as the market falls is to accurately determine the value of individual stocks, confirm that their downward space is not large, and also consider the trend of the overall market and the state of bull and bear markets. Even so, they often endure the torment of long-term sideways trading at the bottom and incur significant time costs.

Compromise method: You can also consider combining buying up and buying down trades, that is, starting to buy only when the medium-term upward trend is established, but not in a hurry to chase the rise, but gradually increasing your position as you fall during the short-term correction process. For example, if you see a good stock that has a lot of room for improvement from both fundamental and technical perspectives, but has already risen significantly, you can only buy 1/5 of the amount of funds first, and then buy 1/5 each when it falls to the 20, 30, 60, and 120 day lines. If you buy a certain level and it rises without looking back, you can give up buying in the next few levels and keep your funds waiting for other opportunities.

In fact, how to buy is a trivial issue, but more importantly, what to buy and when to buy. If the stock quality is good and the stock price is in the late stage of a downward trend or the early stage of an upward trend, then buying more and buying more as it rises and falls is both correct; On the contrary, if the stock price is poor, or if the stock price is in the early stage of decline or the late stage of rise, then no matter how you buy, it is always wrong.

However, it is difficult to accurately determine the position of the top and bottom. To prevent the risk of misjudgment, the method of buying in batches can be adopted according to the actual situation and one's own philosophy to avoid the risk of misjudgment caused by one-time concentrated buying.

In addition, different buying strategies can be adopted at different stages of stock price operation. In the stage where the bottom is just beginning to break upwards, if you are very confident and the overall trend is in line, you can be more aggressive and buy heavier positions from the beginning; If it is a high-level position adjustment and stock swap, a more stable strategy can be adopted, and buy at a low price after the correction.