Our individual investors often get involved in a particular stock due to recommendations from others, positive news, or because the stock price is cheap. However, buying stocks is not the same as buying groceries; it's a bit too casual. We must follow some effective principles and strictly implement them to greatly increase the accuracy and thus achieve good returns. Today, we are going to discuss seven effective principles for getting involved:

Investing is not like buying groceries.

1. Trend Principle

Before getting involved in individual stocks, we should analyze and judge the overall market trend. This is because most stocks follow the trend of the market. It is easier to make a profit when buying during an upward trend in the market; buying at the top is like snatching food from a tiger's mouth, which is quite risky; the chances of survival are slim when buying during a downward trend. At the same time, we should build our positions based on the amount of capital, control our positions well, and be clear whether we are doing short-term or medium to long-term investments, so that we can manage our investments flexibly.

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2. Batch Principle

When we are not very sure, we can consider building our positions in batches and diversifying them, which can effectively reduce the risk of buying. However, the number of different stocks should not be too many; it is best to keep it within five.

3. Bottom Principle

For short-term trading, there are more opportunities for quick entry and exit, and it is important not to linger. The amount of capital should not be too large. The best time for medium to long-term investments is just after breaking through the bottom consolidation area, when the risk is the smallest.

4. Risk Principle

We all know that the stock market is an investment venue with high risk and high returns. It can be said that opportunities are everywhere, and so are risks, and there is no way to completely avoid risks. As investors, we should have a sense of risk, suppress our emotions, and strictly implement systematic trading. When building our positions, we need to consider how much room there is for the stock to rise, where the resistance and support levels are, and where the profit and stop-loss targets are. Having a clear understanding of these factors will allow us to minimize risks within our capabilities.Opportunity

5. The Principle of Strength

"The strong get stronger, the weak get weaker" is an important investment principle. Following this principle, we should focus more on strong stocks and less on or avoid weak stocks. Stocks that are about to catch up in price or are low-priced are far less likely to win than strong stocks and leading stocks.

6. The Principle of Themes

Many friends prefer short-term trading, which requires attention to the market's theme speculation and shifts. Although themes are endless, there are still some patterns. Grasping these patterns will definitely bring substantial returns. It is important to distinguish that some themes will be repeatedly speculated, and we need to grasp the cycles of these.

7. The Principle of Stop Loss

When we establish a position in a stock, it is because we believe the stock will rise, and that's why we get involved. But what if the stock price does not behave as we think and falls? Being trapped not only occupies capital but also affects our subsequent operations and mentality. Therefore, it is better to stop the loss in time rather than suffering. In stock trading, the best way to avoid risk is to stop loss, stop loss, and stop loss again!

Risk Warning

Thank you for reading, see you next time~