Why do retail investors miss bull stocks?
One is to sell when the market is good, fearing that profits
will be given back. Retail investors always think this way, they sell when the
market is good and then buy another stock they like. In this way, they will
continue to make money. This seems to make sense, but in fact it is absurd.
Because under normal circumstances, after selling a stock and then buying
another stock, the other stock is also rising. Since you think the stock you
sold is risky, then the other stocks are also risky because they have risen
together. And those stocks that have not risen may not be without risk.
Because, first, since it does not rise, then, after you buy,
it will not necessarily rise, while you originally sold the stock but instead
rose, which is the risk of stepping on the short; second, you bought the stock,
it is not only in the next market may not rise, but will plummet, so that your
original profits into thin air. This is often the case, where the people who
have speculated in the stock market have a deep feeling in this regard.
The second reason is due to weak willpower. Some people
always think that the stocks they buy are not good. When they see other stocks
rising sharply, their own stocks have not risen for half a day, so they become
anxious and angry, thinking that the stocks they buy are not hot, so they sell
them when they have a small profit or even a loss, and go to buy those stocks
that have risen a lot, which they think are hot and good.
This situation illustrates two problems:
First, it shows that you didn't put much thought into
selecting stocks when you first bought them. You bought them randomly without
carefully selecting them. Even when buying clothes, you know how to pick them
out. Why wouldn't you carefully select stocks when you're investing so much
money in them? It's really not worth it if you can't even do this much.
Second, it shows that you lack self-confidence or
determination. In fact, looking back in retrospect, the stocks you originally
bought were actually good stocks. They actually went up a lot after you sold
them!
Here we are told two truths: First, as long as the stock you
buy is not an industry suppressed by national policies, not a super large-cap
stock, not a stock in a sunset industry, not a product of that kind, it is a
cheap ordinary stock, and it is not a stock that has already turned upside down
to chase high prices. Several times, it is not the kind of stock that has a bad
trend. Don’t worry, it will eventually rise, but you have to be patient.
The second lesson is that you must have strong willpower.
Don't be angry with yourself because you haven't followed the hot trends. You
must believe that the market is fair and that your day of rising will come. The
saying "Those who come later will be on top, and those who row slowly will
reach the shore first" also means this.
Please carefully study the trading principles summarized by
the most successful investors below and you will surely be able to quickly
improve your trading performance.
1. Retail investors do not necessarily have to buy index
stocks because they are relatively slow
and can pay more attention to second-tier stocks. As long as the low range is
consolidated enough and there are signs of restart, they can pay attention.
2. The ability to make accurate assessments of future market
trends while analysing stock charts is a crucial indicator of a mature
investor's comprehensive analytical and practical skills.
3. Avoid trading stocks in a downward trend in an attempt to
identify the "bottom" (since the exact timing and price of the bottom
are unpredictable). Instead, focus on stocks that have established an uptrend.
Among these stocks, identify those with the strongest and most extended
uptrends.
4. When trading individual stocks, it is crucial to consider
the overall market strength and the stock's position within its sector.
Remember, most major players follow the trend, so trade more actively when the
market is strong and take a break when conditions are unfavourable.
5. Diversify your investments by avoiding concentrating all
your capital in a single holding. Unless your funds exceed 10 crores, it is
advisable to evenly distribute your capital and purchase three stocks from
three distinct sectors. Maintain an overall position of no more than 70%.
6. During periods of short-term market fluctuations or
consolidations, avoid purchasing stocks at their peak prices. Instead, prioritize
stocks exhibiting an established uptrend and buy them on dips. Alternatively,
consider stocks that have repeatedly demonstrated strong support and purchase
them during pullbacks.
7. Focus on trading larger-scale rebounds. During these
periods, major players typically have a more substantial presence, the
distribution cycle for driving up the stock price is extended, and the
opportunity to capture the rebound presents a favourable risk-reward ratio. In
contrast, frequent trading of smaller rebounds often results in chasing after
highs and selling at lows, leading to substantial losses.
8. For a stock that has been struggling in a mid- to
long-term downtrend, selling at any time is the right decision. Even if it
means selling at the lowest price. The notion of passively holding on to it,
waiting for a bottom, is dangerous as there may not be one at all.
9. When the market is
adjusting sideways, buy if it falls sharply in the early trading, sell if it
rises sharply in the early trading, don't chase the sharp rise in the
afternoon, buy the next day if it falls sharply in the afternoon, don't cut if
it falls sharply in the early trading and sleep if it doesn't rise or fall.
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