The purpose of most investors trading stocks is naturally to gain wealth. However, in order for small and medium-sized investors to make money in the highly risky stock market, they must master certain skills. What are the techniques for investors to trade stocks? How to select stocks through turnover rate? Let's learn together below.
How to master stock trading skills
If there is no distinction between high and low, strong and weak, and no distinction between time and atmosphere, blindly buying and selling will make it difficult to obtain expected returns. The reason why strong people become strong is mainly because they have mastered the tricks of investment. Now, let's talk specifically about how to master the skills of stock trading.
How to master stock trading skills?
1. Respect the rules. To become a super player in the stock market, one must demonstrate their skills while following the rules. The ups and downs of the stock market are regular, but in most cases we haven't noticed it. Stop loss and take profit are principles that must be followed in order to survive in the stock market. Stop loss can control risks, while take profit can help realize profits. It is essential to understand how to master stock trading skills.
2. Timely stop loss. There is a leaky bucket theory in the stock market, which states that investing in stocks is 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 leak under the bucket, no matter how quickly the water is added, it is impossible to fill it up, and it may even leak out sooner or later. So, to fill the bucket with water, the first thing to do is to fix the leaking bucket. Simply put, in the stock market, one must learn to cut losses, control their desires, and try to preserve their principal as much as possible.
3. Focus closely on individual stocks. Investors buy and sell individual stocks rather than the overall market, and excessive research on the market is meaningless, especially when some heavyweight stocks in the market are waving flags and shouting on the hillside. The market index has already become a tool to suppress the stock market and manipulate the mentality of investors. But it is easy for institutions to control the index together, but it is difficult to control all stocks. Regardless of the market situation, individual stocks will always rise and fall. Therefore, what needs to be done is to conduct sufficient research on the stocks one holds or values. The trend of the overall market is only for reference and is one of the key points for mastering stock trading skills.
4. Dare to buy and sell. Whether the stock market experiences significant fluctuations or sideways consolidation, we have profit opportunities. In recent speculation, institutions have adopted the strategy of abandoning the overall market and speculating on individual stock sectors, even in a downtrend, they can still find stocks that have risen by 10% in a day. If investors can keenly seize opportunities to chase up and down, they can still make profits.
5. Half warehouse exclusive purchase. Discovering a dark horse in the market undoubtedly unlocks a gold mine, but for small and medium-sized investors, it may not be easy to discover a dark horse and ride it. Small and medium-sized investors should seize the opportunity to operate in a stock that they are familiar with and have a more active stock market. The specific approach is to use half of the funds to buy a single stock, sell high and buy low. Gradually reducing positions in a continuous upward trend, and then gradually replenishing in batches after continuous pullbacks and volume reductions to explore the bottom, can avoid the results of one gain and another loss caused by disorderly speculation in individual stocks. This is the key to mastering stock trading skills.
Turnover rate refers to the ratio of the cumulative number of traded shares to the number of outstanding shares of a stock within a certain time frame. High turnover rate reflects frequent inflow and outflow of funds. If the turnover rate is high and accompanied by an increase in stock price, it indicates that the willingness of funds to enter is stronger than the willingness to exit; A high turnover rate accompanied by a decline in stock price indicates that the willingness of funds to exit is stronger than the willingness to enter. How to select stocks based on turnover rate? Regarding how to select stocks through turnover rate, the following will explain the method of selecting stocks through turnover rate.
How to select stocks through turnover rate
The high or low turnover rate not only indicates the adequacy of stock turnover and trading activity within a specific period of time, but more importantly, it is also an important reference indicator for judging and measuring the size of the divergence between long and short positions. A low turnover rate indicates that the opinions of both long and short sides are basically consistent, and the stock price generally experiences a slight decline or enters a sideways consolidation due to low trading volume. A high turnover rate indicates a significant divergence between long and short positions, but as long as the trading activity can be maintained, the stock price will generally show a slight upward trend. Next, let's talk specifically about how to select stocks based on turnover rate.
How to select stocks through turnover rate?
Combining turnover rate with stock price trends can make certain predictions and judgments about future stock prices. The sudden increase in turnover rate and trading volume of a certain stock may indicate that investors are buying in large quantities, and the stock price may rise accordingly. If a stock continues to rise for a period of time and then the turnover rate rapidly increases, it may mean that some profit seekers want to cash out, and the stock price may fall. For the occurrence of high turnover rate, investors should distinguish the relative position of high turnover rate and understand how to select stocks based on turnover rate.
If a stock has seen an increase in trading volume after a long period of low trading volume, and a high turnover rate can be maintained for a long time, it can generally be seen as a clear sign of new capital intervention, and the credibility of high turnover is better at this time. Due to the bottom volume increase and sufficient turnover, this type of stock has a relatively large upward potential in the future, and there is also a high possibility of becoming a strong stock. Investors can focus on these stocks. If a stock suddenly experiences high turnover and trading volume suddenly increases at a relatively high level, it is generally more likely to be a precursor to a decline.
When investing in new stocks, turnover rate is also an important reference indicator. A high turnover rate on the first day of a new stock's listing indicates active buying and selling, with the involvement of major funds, indicating good performance in the future market. If the turnover rate is low and it is difficult for the main funds to gather chips, the future market will face a fluctuating and weak trend until the chip exchange process is completed, which is the key to selecting stocks through turnover rate.
Turnover rate can also accurately reflect the trend of mainstream funds and the main battlefield of the market, with stocks ranked higher generally showing more active performance. The term 'active' here has a dual meaning, referring to individual stocks that frequently appear on the recent rise or fall charts. Investors can include stocks with a daily turnover rate of over 2% in the list of candidates, greatly reducing the scope of stock selection. Then, based on some auxiliary rules, the best variety can be selected from stocks with high turnover rates.
Turnover rate is an important indicator that reflects the trading activity of a stock and measures the liquidity of buying and selling orders. It is like the engine of a car. The higher the turnover rate, the more motivated the stock will be, the higher the stock price activity, and there will be more short-term opportunities. So, what types of high turnover stocks can investors pay attention to when selecting stocks based on turnover rate?
Firstly, there are individual stocks that have been trading lightly in the early stages but have suddenly increased their volume frequently at low levels, leading to consecutive small gains. Due to the light trading volume, it indicates that the downward momentum of the stock is close to exhaustion, and the stock price may have fallen to the point of no further decline. At this point, if new funds intervene, it is easy to cause a ripple effect and activate the stock market.
Secondly, there are individual stocks that have maintained abundant turnover and increased price and volume. This indicates that the main capital has been deeply involved. As the stock price rises, it will continue to be subject to selling pressure from profit taking and unwinding orders. The more actively and fully the turnover is carried out, the more thoroughly the selling pressure is cleaned up, and the average cost of shareholders continues to increase. The selling pressure encountered during the upward trend is also greatly reduced. Finally, for new stocks that maintain a high turnover rate and continue to rise in the days leading up to their listing, it is crucial to choose stocks based on turnover rate.
