Four Basic Principles For Selecting Stocks

People who learn the theory of Tao know that Dow has divided the trend into three categories, namely, major trends, minor trends and short term trends. The main trend is like the tide, and the secondary trend is the waves in the tides.

You can open the Shanghai and Shenzhen stock market, and the K-line chart of stocks, you can see that most of the stock market and the majority of the stock are band sports, and the stock price rises for a few days will take the initiative to callback, after a few days of callback will continue to rise.

The same is true when falling.

Band operation requires us to buy at every inflection point of intermediate upward trend. After a certain increase, we will sell at a downward turning point in the short term.

When buying and selling, pay attention to two points: when buying up, as long as the intermediate upward trend appears, do not control the performance of the stock.

In order to make the band operation safer, we must pay attention to and strictly abide by the four cardinal principles when selecting stocks.

First, choose only the main trend upward, and the stock that is in the ascendant channel to operate, and ignore the stock that the important trend is in the down channel; take the best time when buying; the first time when the inflection point of the intermediate upward trend has just appeared, and sell at the first time when the main trend is blocked down; the stocks that are in the low side for a long time are relatively safe to intervene at the first time when the volume is up.

Two, the market is the vane of stocks. When buying and selling, we must pay attention to the face of the big market. When the main trend and minor trend of the market are downward, it is best to stop the band operation. Indeed, there is a medium and long term upward trend. The positions of the stocks that can be purchased upward should be lighter.

When buying a big market, it is necessary to suspend this operation. However, after a big drop in a few days, you will see the opportunity to come to the band operation quickly and make more money.

Three, only buy and hold stocks that have just started at the bottom, or have just left the bottom area, and the share price has doubled in a short time. In principle, they will not participate; the makers of stocks will only pull up substantially after full absorption and dishwashing, and must not involve all kinds of uncertain initial adjustments.

Four, strive to learn the theory of technical analysis, constantly improve their analysis, judgement level and actual combat ability, and be confident enough to have a good mentality and emotional stability. Only then can you see the language that ordinary technical analysts are unable to decode from the graph, never trust the gossip and stock appraisal personnel. Only by constantly improving their trading system and raising the level of trader, can we find the golden key to open up the wealth Treasury and earn the money that we should get.