The importance of position management
1. Position management is the technique of deciding how to enter in batches and how to stop loss/take profit when you decide to go long on a particular investment. It's essential to execute every step of entering, stopping losses, and taking profits effectively.
2. There are position management experts who have tested the approach of deciding whether to go long or short by flipping a coin. Even with such random decisions, relying on good position management techniques can still make money.
3. Successful investment = objective and concise rules + patience to wait for opportunities + rational control of positions + decisive quick stop-loss + courage to expand profits.
4. A complete investment includes a thorough analysis of the market and individual stocks, when to buy, how much to buy, when to sell, and other complete processes.
However, most investors overemphasize the selection of individual stocks while neglecting more important issues during the participation process, such as how much to buy and sell, and realizing profits or stopping losses. Only by executing every aspect of investment as well as possible can one be considered a relatively successful investor, making long-term stable profits possible.
▲ Adjust positions according to the big trend of the index
The 1248 position management method, as the name suggests, is essentially a batch buying method. The key point of this management method is that the number of shares bought must increase with each purchase. For example, if you are optimistic about Zhonglu Co., you can start by lightly buying 1,000 shares when unsure. When you are more confident, buy 2,000 shares, and when absolutely certain, buy 4,000 shares. If you are very certain, you can buy 8,000 shares. Thus, the key point is to double the quantity with each purchase, which is also the origin of this name. The corresponding graph is as follows.
When should investors use the 1248 capital buying method? Two situations are summarized as follows: 1. When a familiar, good stock is experiencing a pullback. If you are optimistic about a fundamentally good stock and do not want to chase high prices but want to buy low, you can buy 100 shares or 1,000 shares at a relatively low point. When this stock pulls back and reaches a certain level of decline, you can double your purchase. For example, if the decline reaches 5%, you can double your buying once, which can gradually reduce your cost and allow you to buy at a relatively low point. 2. When the short-term trend is still unclear. If you are optimistic about a stock but need to observe further, buy a tenth of your planned buy amount. When the stock's performance aligns with your original expectations, you can buy the remaining shares in batches or simply buy them all at once.
Position management strategies facing both bull and bear markets: Position management strategy in a bull market. In a bull market, the market is in an upward trend, and moving averages are in a bullish arrangement. The biggest risk at this time is not the fluctuation of stock prices but the risk of missing out. Strategy: 1. Do not hold cash, do not miss out; have flexible capital to respond to the market. Every pullback and adjustment is an opportunity. One should operate with a certain base position while using an appropriate flexible position for high selling and low buying to obtain greater profits. 2. Gradually build positions, break through resistance, and add positions on pullbacks. First, use 1/5 of the stock's position for a trial build-up. If the stock rises and breaks through resistance, consider adding positions on pullbacks. Note that a single stock should not account for more than 30% of the total position. If the stock drops below the base buying price by 5%-8%, consider adding positions (the maximum position for a single stock is 30% of the total position). If the stock continues to drop after the second supplementary purchase and reaches the stop-loss line, stop loss immediately.
Note: Generally, investors with capital below 2 million should control their holdings to no more than 5 stocks.
Position management strategy in a bear market
In a bear market, the market is in a downward trend, and moving averages are in a bearish arrangement. It's best not to participate; do not rush to catch rebounds. Instead, follow the trend with light positions to ensure no fundamental mistakes are made.
Strategy:
1. Light position operation is recommended not to exceed fifty percent of the total position; the number of supplementary purchases should not be too many, ideally once. It is generally advised that a single stock's position should not exceed thirty percent.
2. If the decline reaches the set stop-loss point, you should decisively stop the loss and never let the loss expand. Generally recognized in the industry is to keep the loss from each trade to around 3% of the total position.
Closely follow Su Ge, use precise strategy analysis, and with a huge investment of millions in AI big data selection, can you place yourself in an invincible position? The market never misses opportunities; the question is whether you can seize them. By following experienced and the right people, we can earn more!