Every excellent stock investor will form their own unique operating style and have their own suitable trading discipline. Before establishing good trading discipline, one must fully understand the reasons for investment failures, summarize experiences and lessons, and devise a trading discipline that is more suited to oneself.
Investors who often make mistakes in stock operations have many common characteristics, mainly the following four: full positions, full time, pursuit of excess returns, and arrogance.
1) Full Position
In the stock market, there is endless money to earn, and many investors feel regret over not having enough money to buy more stocks. This is a true reflection of many investors who operate with full positions every day, always fearing to miss out on profit opportunities; they often cannot escape the fate of being trapped. After being trapped, what they need to do is to break free and cut losses. The psychological pressure after being trapped is often very high, especially during the major bear market of 2008, where 99% of full-position operators were left scarred. In fact, whatever you do requires backup savings, and stock market operations are no exception.
2) Full Time
The so-called full time refers to investors operating constantly every trading day, regardless of whether the market is good or bad. When the market is good, they actively go long; when the market goes bad, they are also actively going long. By the end of the year, those who perform well neither profit nor lose, while those who perform poorly may incur significant losses, with very few making profits. A key point in stock trading is to assess the major trend, learn to judge the timing, and adapt to the change in the market's major trend to make timely purchases and also take breaks, as grasping the major trend is crucial to earning big money.
3) Pursue excess returns.
This goal is very common for investors; you often hear someone say: this stock peaked at 10 yuan, and if I sell at 10 yuan, I would double my money. In fact, they sold it at 6 yuan; this is a unilateral pursuit of maximizing profits, with a success rate of less than one in ten thousand. Pursuing full profits often leads to 'riding the elevator.' Just like in 2007, when the stock market rose to 6124 points, they still couldn't find the peak. After it dropped, they were still thinking about excessive returns, and ultimately it fell to 1664 points, losing profits and still facing losses. After the index reached 3478 points, they fantasized about excessive profits again, ultimately riding the elevator up and down. To make a profit, do not strive for maximum profit, but rather grasp the profits you can realize; only then will the returns truly be excessive.
4) Arrogance and complacency.
As the ancients said: Pride brings loss, humility brings benefits; this is the way of heaven. It means that arrogance can lead to losses, while humility can bring benefits. When an investor experiences a bull market and then a bear market, becoming an old investor, and then experiences another bull market and makes money, they also learn some indicators' usage and gain some understanding of the industry, they gradually become proud and complacent, as if the stock market revolves around them, chasing highs and cutting lows, trading frequently, and easily falling into it, making it hard to extricate themselves, leading to a deviation in their understanding of the stock market. The stock market changes with policies, economies, and various factors. If one becomes arrogant and complacent and stagnates, they will inevitably be eliminated.
Double Line Capture Bull:
1. The double lines show a bullish upward arrangement trend (adjust the MA indicator parameters to 5 days, 10 days, 60 days, and 89-day moving averages).
2. When the 60-day and 89-day moving averages are closely connected, this point is the origin of the stock price about to explode.
3. The time the stock price stays above both lines is positively correlated with the subsequent price increase; the longer the time, the higher the price, and vice versa.
Practical Case of the Double Line Bull Capture Strategy
Case One
This stock meets the conditions for the double line bull capture strategy. The stock price is above the trend line, and the moving averages are also in a bullish arrangement. Moreover, the stock price has been running for a long time. When the stock price quickly rises back above the moving average, with the moving averages conjoined and the chips highly concentrated, this is the best time to enter, and after entering, there will be significant gains.
Case Two
The stock quickly surged after a rapid pullback. The stock price is above the trend line, with bullish alignment of moving averages, and the 60-day and 89-day lines are conjoined. With concentrated chips and increased trading volume, this is a very favorable time to enter, allowing you to ride the elevator straight to the sky.
Case Three
This stock currently also meets the conditions for the double line bull capture strategy. As long as it meets the conditions of the strategy, finding the right time to enter makes it a major bull stock. This stock has also achieved considerable gains in just a few trading days.
Remember that when investing in stocks, you should only focus on stocks whose prices are above both lines; stocks below both lines are not worth your attention, it's meaningless.
"MACD + KDJ + CCI" three indicators resonate to form a major bull stock:
1. Functions of the MACD Indicator.
In stock market investment, the MACD indicator has gained recognition among many investors as a means of technical analysis. But how to use the MACD indicator to achieve optimal investment returns?
There are two main functions:
First, discover investment opportunities in the stock market; second, protect the investment gains from losses. In stock market operations, the MACD indicator far exceeds its effectiveness in discovering investment opportunities when it comes to protecting investors' interests. As a medium-to-long-term analysis tool, the crossing signals produced by the MACD indicator are relatively lagging for short-term trading.
Definition of MACD:
The MACD indicator, known in Chinese as the Exponential Moving Average Convergence Divergence, belongs to the trend category of indicators. It is composed of five parts: the long-term moving average MACD, the short-term line DIF, the red energy bar (bullish), the green energy bar (bearish), and the O axis (the boundary line between bullish and bearish). It uses the crossing of the short-term moving average DIF and the long-term moving average MACD as a signal. The crossing signals produced by the MACD indicator are relatively slow, but they work better for formulating corresponding trading strategies.
2. Key points on the application of the KDJ indicator:
1. The J line in the weekly KDJ, often overlooked by many, is the most sensitive to stock price reactions and is relatively accurate, so it should be given full attention.
1. When the weekly J line rises above 0 and closes with a weekly bullish candlestick, the goddess of opportunity will descend, allowing for gradual buying. This is especially true in a bullish market where the stock price operates above the 60-week moving average.
2. In a bearish market where the stock price operates below the 60-week moving average, the weekly J line often shows a slow trend below 0. At this time, do not immediately buy; instead, patiently wait for the weekly J line to turn upward and close with a weekly bullish line before buying.
3. When the weekly J line rises above 100 and turns downward while closing with a weekly bearish candlestick, the death demon appears, and one should be alert for a top to reduce positions. This is especially true in a bearish market where the stock price operates below the 60-week moving average.
4. In a bullish market where the stock price operates above the 60-week moving average, the weekly J line often shows a slow trend above 100. At this time, do not immediately sell; instead, patiently wait for the weekly J line to turn downward and close with a weekly bearish candlestick before taking selling action.
2. Advantages and disadvantages of KDJ:
1. Analysis shows that the KD indicator is mainly used for determining the time cycle changes at high and low price points. The dead golden cross is a reconfirmation of the high and low points in a phase, indicating the direction of price change, i.e., the time point of trend change. Monthly, weekly, and daily represent different trend levels. The major trend encompasses the minor trend, and the minor trend obeys the major trend, but through the accumulation of minor trends, it ultimately influences the major trend.
2. The KD indicator has extremely high accuracy for the market and popular blue-chip stocks, often used to determine the nature of the market index to guide whether to go long, short, or stay on the sidelines.
3. The KD indicator is not suitable for stocks with low trading volume and inactive trading; speculative stocks are also not suitable.
4. The KD indicator cannot determine the magnitude of price increases or decreases and must be combined with other methods, such as wave theory or Gann theory, for judgment.
5. The slow trend of the KD can cause a loss of direction.
For stocks that are in a main upward trend, there is no need to look at the daily KDJ. Because at this time, the daily KDJ often shows a slow trend. Those who are used to using KDJ often find it very difficult to grasp a strong main upward trend. Why? One possible reason is that they forget that KDJ is showing a slow trend, thus limiting their thinking and operational patterns.
3. The key points for accurately grasping KDJ are:
1. The position of the KDJ contains opportunities and risks. The KDJ at a low position contains opportunities, while the high position contains risks.
a. High-position KDJ at a large level contains great opportunities; low-position KDJ at a small level contains small opportunities: low-position monthly KDJ indicates a major trend; low-position weekly KDJ indicates a medium trend; low-position daily KDJ indicates a short-term trend.
The monthly KDJ is brewing a major trend at the monthly level.
b. Similarly, a high-position monthly KDJ poses a significant risk; a high-position weekly KDJ suggests a medium-term decline; a high-position daily KDJ faces short-term risks.
c. Generally speaking, ordinary investors mostly use daily KDJ and 60-minute KDJ. The 60-minute KDJ at a low position has a golden cross, generally rising for about 8-12 hours. When the 30-minute and 60-minute KDJ show a high-position dead cross, there will be a few days of pullback, so wait for the 30-minute and 60-minute golden cross before buying.
3. CCI Indicator
When using the CCI indicator with weekly candlesticks, as long as the weekly candlestick CCI drops below -100 and then rises above -100, the success rate can reach 95%.
When there are no opportunities, one must endure loneliness and never buy stocks casually; wait until the conditions appear to do so. Always use the weekly candlestick to analyze.
CCI is also known as the trend indicator.
The highest success rate is achieved using weekly charts. The CCI should first drop below -100 and then return above -100 at that moment for the highest success rate. When the CCI drops from above +100 to within +100, the success rate is also very high.
You can try a few more stocks, look at their past trends, and see how accurate they are.
Let me randomly select a few stocks, and you can see how the CCI indicator looks.
To add: The longer the analysis cycle, the higher the success rate; success rate = daily line.
Unless you are a short-term expert, it is best for ordinary people to use weekly charts for medium-term wave trading. The best scenario is when both the weekly CCI and the monthly CCI drop below -100; that is the perfect buying point.
Satisfy the endless richness found in diligent repetition and subtle changes in common things.
Due to the market's chaotic and disorderly trends, it is impossible to find general rules; excessive analysis and forced predictions are like seeking fish from a tree. Therefore, accepting the fact that the market is unpredictable is the first step to establishing a psychological advantage.
Remember, perfect traders do not exist. You cannot conquer yourself; your weaknesses will accompany you for life. However, accepting your weaknesses can make you more flexible and effectively reduce the cost of making mistakes.
Beyond making money, find a trading motivation that suits your personality. Understand what factors motivate you to be a trader, try to improve daily while enjoying the process; this can help you enhance your performance and maintain long-term profitability.
Trading risk is directly proportional to the time the trading position is held. Therefore, the best way to control risk is to control trading time. Never buy just because the price is low or sell just because the price is high; never increase your position when you are at a loss.
Stay calm when trading goes smoothly and don’t be overly excited; don’t be too depressed when things don’t go well. Understand right and wrong correctly; don’t judge heroes based on results.
Sometimes you do the right thing and still lose money; sometimes you do the wrong thing and make money. The correct approach does not guarantee success, but the wrong approach ultimately leads to failure.
Follow Su Ge closely, use precise strategic analysis, select significant big data investment wisely to keep yourself in an invincible position? The market never lacks opportunities; the question is whether you can seize them. Only by following experienced and right people can we earn more!
