Category: Money Tips Date: 2006-03-14
Most retail investors buy the stock after the quilt can take the initiative to take measures in only one way - to cover short positions. However, do not cover their short positions, as described in the theory as simple as smoothing the cost price, in many cases there is a skill to cover short positions, and make up badly but luckily more.
The general principle is: The falling Suliang opponents weak stocks can not easily cover their short positions, the so-called weak unit volume is smaller, turnover is low, having a performance in the broader market rally, when the rebound hard enough, but when the broad market fell very easy to fall. Once the unit is defined as weak, then its cover their short positions to be cautious. People know not to cover their short positions to further entangle the operating funds, but to some sort of relief funds as soon as possible lock-out can not be sure to cover short positions in the stock market will be strong under the premise of a hurry to cover short positions in the so-called low, the risk is significant. Confirmed the strong shares, dare continuously strong growth in capital stock to cover short positions is the true meaning of success.
Some investors, parochial, identified in which stocks lose money, insisted on that stocks added back. In fact, the A shares lost in the B shares in exactly the same effect as a bonus.
Investors account for a fluctuation in the profits, the trend is still opportunity to further development of overweight cover their short positions, is one of the ways to strike a victory. Cover their short positions overweight, are more strategic use of funds, how the allocation of public talk about techniques.
Increase in the hands of the transaction, in terms of quantity, there are basically three kinds of situations: the first one is the "inverted pyramid", namely to raise the amount of time than the original multi-position; second is the uniform-style, that is, every time to raise the same amount; third is the pyramid, that is, to raise the amount of each transaction less than half of the previous batch.
Smooth, then the above-mentioned three kinds of processing can make money. If the market reverses, these three which deal with more scientific, which is more reasonable to enact legislation to see the high score.
Suppose we have 5 yuan per share, to buy A shares, followed up the prices, followed by 5.50 yuan overweight, overweight cover their short positions to 6 yuan again. And assuming that the funds on hand can be done a total of 7 million shares, if the distribution of the above three methods, it will produce the following three different average price:
"Inverted pyramid" in 5 yuan to buy a million shares at 5.50 yuan overweight 2 million shares, 6 yuan to buy a further 4 million shares to cover short positions, with an average price of 5.71 yuan.
Uniform type in the 5 yuan, 5.5 yuan, 6 yuan to buy all three price points the same number of shares at an average price of 5.50 yuan.
The pyramid overweight cover their short positions, 5 yuan to buy 4 million shares at 5.50 yuan to buy 2 million shares coded, 6 yuan and buy a million shares to cover short positions, and so, with an average price of only 5.285 yuan.
If the stock continues to rise, the 7 million on hand, uniform-style overweight than the "inverted pyramid style" earn 0.21 yuan per share. "Pyramid-style" to cover short positions than the "inverted pyramid style" earn 0.425 yuan per share. Clearly, the pyramid-style money superior.
Conversely, if share prices repeatedly, breaking the 6 yuan and later landed on the 5.50 yuan, which, the "inverted pyramid" As the average price too close to market value, immediately by the money into a loss, the original floating profits vanish and is stuck with ; uniform-type coded reluctantly "force protection lose" also come to naught; only "pyramid" average low price while still profitable.
So, the correct cover their short positions is the flow, and maintain the purchase price pyramid structure, so that the average price relatively low, changes in price can ensure safety.
