What are the effective strategies for retail investors?

There is a biological chain in nature and there is also a biological chain in the investment market. In this biological chain, retail investors play the lowest link and are eroded by the main players, bookmakers, institutions, enterprises and the market. In response to this current situation, every retail investor must clearly understand the vulnerable environment in which he or she is located and formulate an investment plan that suits him or her, in order to survive in this environment of the jungle and the strong.

What kind of trading strategies and methods are suitable for retail investors? To put it simply, the right investment strategy should be formulated based on the specific circumstances of the investor, including their time horizon, risk tolerance, and investment goals. While there is no one-size-fits-all investment strategy, there are some fundamental principles that can help retail investors make informed decisions.

1.Bright trend trading: According to statistics, in the investment market, 80% of the stocks fall when the index drops, and 80% of the stocks rise when the index rises. According to this rule, in a downward trend, its risk-to-profit ratio can be seen as 8:2; while in a rising market, the risk-to-profit ratio is 2:8. Therefore, if investors want to avoid risks, they must first choose the trend.

2. Chip theory: In the securities market, people often say "buy stocks to invest." In reality, the investment groups we see all profit from the price difference. This reality can also be seen from the fact that the total amount of taxes and transaction fees last year was basically equivalent to the total profit of listed companies.

This means that whether it is the main force or the retail investor who profits in the market, it is all at the expense of the capital of other investors. It is also due to this reality that the market is controlled by the main force, leading to artificial price manipulation and false themes. Therefore, if stocks are regarded as chips, when the chips are highly concentrated, the extremes will turn against each other, and investors can sell them; on the contrary, the process of continuous dispersion after high concentration of chips is the stage of continuous bottoming of stock prices. Investors should use this theory to avoid falling into the pitfall of investment philosophy.

3. Swing Trading: The stock market moves in waves. During these waves, the investors who profit the most are not the long-term investors or the short-term investors, but rather the investors who are skilled at swing trading. Since swing trading involves buying and selling stocks at specific points in the market cycle, investors cannot buy stocks every day and hold stocks every day.

4. Maintaining a Neutral Mindset: In the securities market, investors have already determined whether they will make a profit or a loss before buying a stock, but they still have to wait for reality to set in. When reality arrives, whether it is a profit or a loss, it will cause investors' emotions to fluctuate. When these emotional fluctuations are small, investors can still analyze rationally; when these emotional fluctuations are too large, investors will become emotional and will not be able to follow any investment and trading strategies to make a profit. This is the biggest enemy of retail investors - not the main players, not the market, but themselves.

5. The Importance of Self-Reflection: As the common saying goes, "Failure is the mother of success." However, many retail investors lose their rationality in the face of failure, blaming others and external factors instead of calmly analysing the reasons for their losses and persevering through setbacks.

6. Resolute Stop-Loss: Stop-loss is a difficult lesson for retail investors. When the stock price rises, they tend to raise their expectations, and when it falls, they have a mentality of not selling at high prices and even less willing to sell at low prices. Once they are trapped in a losing position, it becomes even more difficult to cut their losses and escape. This is also a major reason for the failure of retail investors. Therefore, when investors choose risk-averse investment strategies, they must be prepared for risks and have the ability to manage them.

In conclusion, it is crucial for everyone to have a clear understanding of the skills and knowledge required in the investment market. Investors need to maintain a positive investment mindset, exercise patience in waiting for market returns, conduct thorough research and analysis, and formulate sound investment plans. Only by adhering to these principles can investors achieve more rational and stable returns in the stock market.

_________________

Buxone money June 17, 2024