Basic Principles of Stock Selection
Many speculators buy stocks very casually, as long as there is a stock reviewer’s recommendation, or good rumors, it is bound to be bought. As you can imagine, after buying, most of them are trapped, and then take them home to sleep, waiting for the release of the trap. If we can master some effective principles and strictly follow them when buying stocks, we can greatly reduce them.Increase profitability by making fewer mistakes.
Trend Principle: Before preparing to buy stocks, we should first have a clear judgment on the trend of the market. Generally speaking, most stocks follow the trend of the market. When the market is in an upward trend, buying stocks is easier to make profits, while buying at the top is like pulling teeth. Buying in a downward trend is difficult to survive.There are few buying opportunities in China. We should also formulate investment strategies according to our own financial strength, whether to prepare for long-term investment or short-term speculation, in order to clarify their own operational behavior and achieve a targeted goal. The selected stocks should also be strong stocks in an upward trend.
Batch Principle: Without full assurance, speculators can buy in batches and buy in scattered ways, which can greatly reduce the risk of buying. However, there are not too many kinds of stocks to be bought separately. Generally, it is better to buy less than 5 stocks. In addition, buy in batches should be based on their investment strategy and financial situation.Land-based implementation.
Bottom Principle: The best time to buy stocks in the medium and long term should be in the bottom area or in the early period when the stock price has just broken through the bottom rise, which should be said to be the time of minimum risk. Although short-term operations have opportunities every day, we should try to take into account the short-term bottom and short-term trend changes, and fast in and out, while investing in the amount of funds.It’s too big.
Risk Principle: Stock market is the place of investment with high risk and high return. It can be said that risks are everywhere and everywhere in the stock market, and there is no way to avoid them completely. As a speculator, he should have risk awareness at any time and minimize the risk as far as possible. The timing of buying stocks is to control the wind.The first step in risk is also an important one.
The principle of strength: the strong will always be strong, the weak will always be weak, which is an important rule of the stock investment market. This rule will guide us when we buy stocks. In accordance with this principle, we should participate more in the strong market and less in the weak market, between the same sector or the same price or the stocks we have chosen to buy.Strong stocks and rising stocks should be bought, not weak stocks or stocks that think they will replenish the increase and have a low price.