There is no doubt that we are in the middle of a bull market. In the cryptocurrency bull market, one can look to short, but absolutely do not attempt to short.
It is better to wait for prices to fall and then choose to go long at a low position rather than having any thoughts of shorting. The risks of shorting are almost limitless, as the price has limited downward space, while the upward potential is hard to estimate. For that little profit from shorting, even if you succeed ten times, you may feel good about yourself. But just one mistake, getting stuck in a position, and you will find yourself in dire straits.
Having experienced three rounds of bull markets, I have seen too many investors; none have significantly accumulated wealth through shorting; they all ended up in liquidation. I have interacted with many industry big shots, and none have laid the foundation of wealth through shorting. On the contrary, it is long-term holding of physical stocks that ultimately leads to wealth accumulation.
The total trading volume of the Shanghai and Shenzhen stock markets has surpassed 600 billion, reaching 607.1 billion, an increase of 110.7 billion from the previous day. The major index has shown a polarization phenomenon, with the Shanghai stock market down 0.5% and the Shenzhen stock market up 0.94%, with more stocks rising than falling, which is quite different from the past.
It can be confirmed that GJD has taken action again. If nothing unexpected happens, foreign capital is also bottom-fishing quality A-share assets.
In contrast to these large funds, retail investors in A-shares are unusually pessimistic, suffering from prolonged downturns, and are deeply troubled, having little hope for future market conditions, believing there will be further declines ahead, and are surrendering by selling their cheap chips.
The chips they sold may have been built up when the market was above 3000 points; selling short at that time will definitely lead to heavy losses.
Many people cannot make money in A-shares for a reason. When the market is booming, they rush in; however, in a bleak market like now, they are all closing their accounts and leaving.
They are doing the opposite without realizing it; when they incur losses, they use trend trading to excuse themselves.
It is not to say that trend trading is entirely without merit, but rather that it is truly difficult to master this trading method; without superb technical analysis skills and deep insights into human nature, it is challenging to execute trend trading.
If you see the market rising and jump in, it may be that the big players are luring you in; if you see the market falling and sell, it may be that the big players are washing the盘, trying to force out retail investors who are not resolute enough to pick up more cheap chips.
As a small retail investor, it is really difficult to engage in trend trading. There are many pitfalls, and one may even fall into the vicious cycle of chasing highs and cutting losses.
To avoid pitfalls and paying more tuition fees, one should change their investment mindset and not let others' emotions lead them around.
Stick to one principle: only buy stocks of quality listed companies, do not participate in speculative small-cap stocks, stay away from ST stocks, and the profits made from playing with fire are hard to hold onto; even if you are lucky enough to make a profit, you may not be able to keep it.
The truly profitable investments are to go long at the end of a bear market and to short at the end of a bull market.
Although we cannot precisely catch the bottom or escape the peak, we can judge the highs and lows of market trading sentiment.
For example, now, with low trading volume, people are closing their accounts and leaving; the market is bleak, and there is a general fear of stocks. It is highly likely that we are at the end of a bear market. Those who say there will be a bigger drop ahead are mostly alarmist and baseless; their conclusions do not hold water.
From the current signs, the policy does not allow a drop below 2800 points, which is why GJD has acted time and again. Even if there is a decline, the space is limited, and the possibility of a significant drop is very small.
In the late stages of a bear market, many good stocks are already undervalued. It is a good time to buy at a 40% discount. Although one may not be able to precisely catch the bottom, buying at a sufficiently cheap price offers a larger margin of safety. Once the stock market warms up, or even when the bull market comes, if valuations rise again, who will make a big profit if not you?
Shorting in the late stages of a bull market is to lock in profits. Although one may not be able to precisely escape the peak, earning within our cognitive range is already sufficient.
The stock market has cycles; there is no perpetual bull market and no perpetual bear market. If you endure, the clouds will part and the moon will shine; the bear market will eventually end.
In a bear market, going long to build positions, buying undervalued stocks, as long as you have enough patience to wait for the next bull market to arrive and sell at an overvalued price, there is a high probability of achieving good excess profits.
Share a fundamental logic of the chip side.
I have been tracking the chip side of stock index futures options, so I am very interested in this area and understand it well. My previous articles have focused on the long-short ratio of ETF options, and I will add the long-short positions of domestic futures institutions' stock indices this afternoon. These are all part of the chip side.
I believe: banning shorting is not feasible; only a complete relaxation of shorting can lead to a bull market. Relaxing shorting is the starting point of a bull market!
Because: today's bulls are tomorrow's certain bears, and today's bears are tomorrow's certain bulls.
Is it a bit convoluted? Let me explain; all trading is completed by 'one buy + one sell'.
Thus, those who hold stocks/funds today are certain to sell stocks/funds tomorrow, as everyone is speculating; when prices rise, they want to sell, which is what shorting is.
Similarly, those who short must go long to cover their short positions tomorrow, which is a certain bull.
One is to buy first and sell later, while the other is to sell first and buy later.
Therefore, those who hold stocks/funds are actually all shorting forces.
It can also explain why the more chips a retail investor holds in a stock or fund, the harder it is for that asset to rise.
It can also explain why US stocks have continued to rise strongly in recent years, as the number of bears has increased, and the more fiercely US stocks rise is precisely because today's bears will become tomorrow's certain bulls.
Moreover, the pressure to short is very high because stock prices can rise infinitely; a stock priced at 10 yuan can rise to 50, 100, 200, or even 500 or 1000 yuan, whereas the most it can fall to is 0 yuan. Once the main force focuses on a short position, it can trigger a short squeeze (forced short covering).
Therefore, the more people who short, the stronger the upward momentum of the stock market. This is the key to why US stocks have been bullish for a long time—there are too many bears betting against US stocks.
In contrast, retail investors in A-shares have no way to short; let me ask—if more than 95% of the entire market is long, and everyone wants to make money, whose money do you think they will make?
The reason why A-shares are stagnant is that there are too many buyers, while the reason why US stocks keep rising is that there are too many sellers.
Therefore, I believe that the key to a rise in A-shares is to change the trading system, to relax the short-selling mechanism, allowing everyone the opportunity to short, rather than only certain large investors being able to short while retail investors can only watch.
Only by relaxing and treating everyone equally with a free long and short mechanism can A-shares have a chance to welcome a real bull market. Before changing the rules of the game, there is no way to avoid following the trend, making price differences, and seeking survival.
Iron law of stock market survival—three don'ts.
1. Do not trade in a downward trend of the market.
The formation of a downward trend in the market is a huge collective force, like the Yellow River flowing downstream, surging and rolling, and it cannot stop unless it encounters strong resistance. Occasionally encountering a minor resistance may lead to a small uptick, but it will quickly be submerged in the rolling flood again. Once a downward trend is formed, inertia will carry it for a long distance. In this situation, how can the main force (the market maker) boost a particular stock? A shrewd market maker would not do such a foolish thing.
Therefore, be suspicious of the buying points that appear in a downward trend; they may be deliberately created by the main force to lure in buyers! Remember! Remember! It is better to not trade than to trade against the trend wrongly!
A downward trend is characterized by each wave being lower than the last. The downward low breaks the previous low, while the upward high does not break the previous high.
2. Do not trade if you cannot find the main force group.
Markets without the participation of main force groups will not go far; they lack sustainability. First, only the collective force can reverse a downward trend; however, not all who can hold the market's downward trend are main force groups. After a long period of decline, the bearish forces are released, and eager bullish forces, along with retail investors and speculative funds, will emerge in large numbers. The main force group lays out a big picture, definitely with a main line focusing on a specific industry, which is the main line of attack; others are secondary lines. After one wave of rise, the sector that performs best will validate this thinking.
Thus, finding the main force group is particularly important. If the individual stock you choose happens to be the main line of the main force group, it will certainly move fastest and with the largest amplitude. Otherwise, it will just be a one-day market, with inconsistent movements, scattered trends, and uneven efforts because there is no engine for sustained output!
How to find the main force group? First, look at the market direction. From the four major markets, find which market has performed better, increased earlier, and the main force chooses this market; that is the biggest direction. Second, look at the industry direction. Industries with main force groups usually show characteristics such as: strengthening against the trend in the early stage, resisting declines in the later stage, leading the market actively on the first day of the turnaround, and having leading stocks with price limits, with funds showing relay patterns across different sectors with clear alternation among individual stocks... Gradually observe and comprehend!
3. Do not trade if it is not the first moment.
When the four major indices turn collectively, this is the first moment, the beginning of the main force's attack, the starting point of the rise. Buying here minimizes risk and maximizes profit. In fact, the stock market requires patience, waiting for a perfect attack opportunity, which is the best time to open a position.
If you can strictly execute the three don'ts mentioned above, you will find that there are very few actual opportunities to open a position. Since the bottoming on February 5th of this year until today, there were 8 opportunities to open a position in the Shanghai Composite, 5 in Shenzhen, 4 in the ChiNext, and 5 in the Sci-Tech Innovation Board. There were 5 times when the two major indices resonated, and 4 times when the three major indices resonated (the lowest standard for resonance among Shanghai, Shenzhen, and ChiNext; the Sci-Tech Innovation Board currently has a smaller market value, which can be viewed as having an influential individual stock direction). In four months, there were only four opportunities; most of the time was unsuitable for trading, which is the fundamental reason why most people lost money—doing more leads to more mistakes, being overly diligent at the wrong time, resulting in hardship, exhaustion, and loss!
I have always liked the saying by Taiwanese trader Luo Wei: aim for opportunities with a win rate greater than 70%. Sometimes, even making a move once a month is enough. A hunter does not just shoot at flying birds; he carefully aims with his limited bullets and then hits the target with one shot!
Currently in a bull market, with opportunities every day, we share codes.
Still, that being said, if you don't know what to do in a bull market, click on my avatar, follow me, for bull market spot planning, contract codes, and free sharing.
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