Have you noticed a fact?

Many of the stocks you have operated in the short term have ultimately set new highs in the ups and downs, becoming strong stocks.

How many people have missed one after another strong stock.

The profit and loss on your current account is likely far less than the income you would have made by holding a stock for half a year or a year.

Don't be surprised, this situation is actually very common.

But this is not to advocate long-term investment, value investment.

But I want to tell everyone, the logic behind the transaction must be the strong always strong.

Unless you are a standard short-term investor, you should think about a question.

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What is your profit model for buying stocks?

Is it to expect to accumulate small profits, or to expect to make big money and lose small money in stock selection.Here is the translation of the provided text into English:

Explain briefly two types of profit models.

The first type, accumulating small profits to make a big one.

So-called accumulating small profits to make a big one, is to accumulate total profits through the way of trading profits.

In simple terms, in short-term trading, by making more profits than losses in each transaction, profits are accumulated.

This way of accumulating profits is a high-frequency probability, achieved through the difference between taking profit and cutting loss.

For example, taking profit at 10% and cutting loss at 5%, even if the number of taking profit and cutting loss is half, or even cutting loss more, it can still be profitable.

Then, through the accumulation of profits from each transaction, small victories are accumulated into big victories.

This method is mainly suitable for short-term trading.

The advantage is that the risk is actually very low, as long as you strictly follow the trading system, there will be no big losses.

However, this trading model has high requirements for the investor's trading quality and the execution of the trading system.Without a good trading system and strong execution, it is impossible to achieve success.

The second type is the stock selection that makes a lot of money and loses a little money.

The foundation of this trading method does not rely on trading skills, but on stock selection abilities.

By selecting strong stocks, one can achieve trading profits.

For example, if you buy five stocks, and one of them doubles, while the other four rise and fall, you can still end up with a good profit.

Even if three of them suffer a 50% loss, and the remaining two have one with a 50% profit and one with a 100% profit, you can still break even.

In this method, the trading cycle is extended to see the results.

This trading model, if based solely on probability, is difficult to make money, and it also needs to be combined with strategy.

And this strategy is actually to discard the weak and retain the strong.

For example, if a stock falls by 15%, a stop loss is executed, and if it rises by 50% or even 100%, a profit-taking is conducted.If you choose 10 stocks, and 7 of them exit with a 15% loss stop, while the remaining 3 exit with a 50% profit, you still make money.

The underlying principle of this method is phased investment, which is more inclined towards long-term thinking.

As for the 15% stop loss, it is just used to deal with the safety line of short-term buying points and volatility.

The proportion of companies that can rise significantly is only one in ten, that is, 10-20%.

Most stocks are fluctuating, or even going down.

But those companies that rise, there are also many with several times the increase.

From a purely mathematical statistical point of view, the final rise and fall of the entire market will be weighted and averaged to the index.

But essentially, if you moderately diversify to buy individual stocks and continuously eliminate the weak and keep the strong, the probability of catching a bull stock will be greatly increased.

But the key to all this is not only in stock selection, but in eliminating the weak and keeping the strong.During the process of rising, most individual stocks will inevitably go through one round of adjustment after another.

Some people will call it "washing the plate."

In fact, washing the plate itself is a normal adjustment caused by the divergence of funds after the stock price rises.

There are two reasons that will trigger the washing of the plate.

One is the lack of following orders, fear of heights, leading to high-level oscillation.

The other is the main capital's profit-taking, and the priority to make a high throw at a high position.

Here arises a question, whether to sell or reduce positions after a stage of rising is completed.

Many times, we leave at the top of the stage, but there is no action to buy back.

After that, the stock price will rise in the next round, resulting in a missed opportunity.

Later on, it is completely out of touch with this big bull, and the people who continue to chase the car are always a minority.Short-term fluctuations can cause us to miss many strong individual stocks.

But the problem is, what if this stock really has reached its peak, what should we do then?

In fact, this is also a choice and a game, and the solution to this problem is actually the trend, and it is the big trend.

Give a few cycle levels, measurable standards.

First, the trend of the 20-day line.

The weekly level of the market, reflected in the daily line, the most important trend is the 20-day line.

If the 20-day line breaks, or even the direction turns down, it can be determined that the short-term trend is over.

Generally speaking, the main line of a round of the market, generally will not break the important trend line of 20 days.

But if the 20-day line is broken, and it still goes up, then it is not the rise of the weekly level, but the rise of the monthly line.

All trends will rise to a higher level.The trend of the daily line is to observe the market at the weekly level, while the trend of the weekly line is to observe the market at the monthly level.

Secondly, the trend of the 20-week line.

The 20-week line is the standard for testing big bull stocks, while the 20-day line is only a phase of the market.

Any big bull stock will basically move upwards along the 20-week line.

A large-scale adjustment will break through the 20-week line, but it should never affect the direction of the 20-week line.

That is, within a few weeks, corresponding to a few months, the stock price will recover the 20-week line and continue to move upwards.

Most super bull stocks, more than five times, are basically moving upwards along the 20-week line during the main rise.

The 20-week line can be said to be the real reference line for testing bull stocks, not the 20-day line.

Thirdly, the trend of the 20-month line.

The last one is the 20-month line, which is not used to test the rise of bull stocks, but to test the profit-taking of bull stocks.Even the best-performing stocks won't rise continuously; they will inevitably reach a phase end at some point.

The end of the major trend for these stocks is when they break below the 20-month moving average or when the 20-month moving average turns downward.

For big winners, the trend of the 20-month moving average is unbreakable.

Once the trend of the 20-month moving average changes, it usually indicates a change in fundamentals or the stock price has been inflated into a bubble.

For ordinary investors, being able to catch the turning point of the 20-month trend is essentially a big winner.

Common limit-up and limit-down movements are not even a ripple in the trend at the monthly level.

Some people look at the annual line, but this cycle is a bit too long, making the timing of buying and selling points very imprecise, and it is not very recommended as a reference.

The essence of long-term thinking is not necessarily to do long-term, but to use a large cycle to fit a small cycle to identify the direction of the trend.

It's not that you can't make money with short-term trading, it's just too tiring.

In the future, those who do short-term trading will be programmatic systems, and the human brain will have to compete with the machine brain, and also defeat the strategies calculated by the system, and overcome the weaknesses of human nature in trading, which is quite difficult.Consider adopting a long-term perspective to view short-term fluctuations, seeking directions and trends with certainty.