In stock investing, the rebound market is like the mysterious and unpredictable changes in the weather, carrying both enticing opportunities and hidden risks.

Understanding how to precisely seize rebounds and profit from them, as well as knowing when not to chase rebounds, is akin to holding the key to unlocking the door to wealth for investors.

I. The Three Major Strategies for Seizing Rebounds

1. Precise Buying Strategy

In a rebound market, the precise timing of buying is like making a wise decision at a critical moment.

If one is too hasty in chasing rebounds, it is easy to become mired in the quagmire of being stuck, leaving investors in a state of anxiety and helplessness;

Advertisement

On the other hand, if one is too slow to act, they may watch as the perfect buying price slips away, missing out on a valuable opportunity.

Therefore, it is crucial to steadfastly adhere to the principle of not chasing highs.

Absorbing stocks that have fallen sharply after a plunge gives investors the strong initiative to control their entry and exit freely, effectively avoiding the passive predicament brought about by blindly chasing highs.1. Amidst the ups and downs of stock prices, patiently waiting for the right moment is akin to an experienced hunter silently waiting for the best opportunity to strike. Once the timing is ripe, act decisively.

2. The Art of Skillful Selling

Rebound markets often confuse investors with a rapid and intense upward momentum, leading them to mistakenly believe that a new round of growth has already erupted.

However, throughout history, it is rare for a rebound to successfully evolve into a reversal, typically requiring a perfect alignment of many factors in the market environment.

The vast majority of retaliatory rebounds will encounter resistance at a certain key level and then retreat. At this point, investors must be highly vigilant.

Investors who have missed out should not hastily chase the rise to avoid falling into trouble again;

Investors who have made profits should make a timely decision to take profits, firmly holding the fruits of victory in their hands.

Understanding when to sell stocks at the right moment is an excellent manifestation of investment wisdom.

3. The Science of Stock Selection

In the journey of grabbing rebounds, stock selection plays a crucial role.Never choose blue-chip stocks that may have investment value but are sluggish in stock performance, nor should one opt for low-priced large-cap index stocks. Instead, focus should be directed towards speculative stocks with relatively small circulation and active stock performance.

At the same time, stocks with extremely low trading volumes, which are considered cold and less popular, should be resolutely avoided to prevent operational errors due to difficulties in entering and exiting positions.

When short-term speculative opportunities in individual stocks are detected, closely monitor the dynamic changes in trading volume.

Once the trading volume significantly increases, it implies that the main force has taken action, and the chances of success in following the trend will greatly improve.

Selecting the most potential stock from a vast sea of equities is akin to searching for a dazzling gem in a vast desert of sand, requiring keen insight and rich practical experience.

II. Five situations where one should not attempt to catch a rebound

1. Do not attempt a rebound with an overweight position

When attempting to catch a rebound, the proportion of capital invested must be strictly controlled. It is neither advisable to go all-in with a heavy position, nor to gamble with a full position.

If an investor with an already heavy position rashly participates in a rebound trend, they are highly likely to fall into a passive predicament where they are fully trapped.In the fierce battlefield of investment, the rational allocation of funds is akin to deploying troops and is the core element in achieving victory.

1. Over-weighted positions can cause investors to lose flexibility and room for maneuver in the ups and downs of a rebound market.

2. Do not chase rebounds without setting a stop loss.

Although a rebound market provides opportunities for speculation, it also clearly indicates that the market has not fully turned strong.

When participating in a rebound market, one should always adhere to the principle of safety first and profit second.

Not setting a stop loss is like walking on the edge of a cliff without a safety belt; if the market changes suddenly, investors will suffer heavy losses.

Setting a stop loss is a strong protection for one's investment and an important sign of rational investment.

3. Do not chase rebounds when the bearish trend is established.

When the market is in the early stages of a bear market and there is still a significant downside potential, or when the market trend is in a clear downward channel and the market is extremely weak, chasing rebounds is undoubtedly a risky move.

At this time, investors should remain calm and patient, waiting for the market to turn quietly.In the situation where the weakness is already evident, attempting to catch a rebound is like rowing against the current, fraught with difficulties and enormous risks.

4. Do not attempt to catch a rebound in controlled old-village stocks

Controlled old-village stocks have been manipulated over a long period, with the manipulator's costs being extremely low.

Even after a significant plunge, the manipulator can still reap substantial profits.

For such stocks, regardless of whether they have experienced a deep correction, it is not advisable to attempt a rebound.

Investors should stay away from these stocks filled with uncertainty and carefully select investment targets with more potential and stability.

5. Do not attempt to catch a rebound when the decline is accompanied by increased volume

After a stock price has been continuously falling for a considerable period, when the bear market is nearing its end and one is preparing to catch a rebound, one should choose stocks that are falling without volume, and absolutely not select stocks that are falling with increased volume.

Increased volume on a decline often implies that the market still has significant uncertainty and risk, while a fall without volume may be a harbinger of an impending market bottom.

When selecting rebound targets, closely observing the changes in trading volume can provide investors with crucial decision-making reference.In summary, during a stock market rebound, investors must not only fully grasp the tricks for capturing rebounds but also clearly understand the situations where it is not advisable to chase rebounds. Only by doing so can they make rational and wise decisions in the complex stock market, thereby achieving steady growth and preservation of their wealth.

Note: The market carries risks, and investment should be approached with caution.