Category: Money Tips Date: 2007-07-02
Most investors chase short-term opportunities in the stock market, like the bees pick flowers out of the same frequency, but they were unable to extricate themselves into a loss, and even puzzling. After repeatedly thinking can be found, when we dedicate 10 million yuan each at 10% while the loss of profits is also sold at 10% of that is, after all five of the profit and loss, the only remaining 84.1 thousand yuan. This means that if we do short-term trading, even if the success rate of 50% the result is still a loss. Even if the success rate increased to 60% was only tied only, unless we can increase their success rate to 70%, and can be a little of the profits. However, I believe he has the ability to reach more than 70% long-term success rate is unrealistic. Therefore, short-term profit is often unreliable, and often no hope of profit and losses they have taken. Therefore, if investors want to have a sustainable and stable profitability, we must measure the following points.
(1) The real success rate.
Real investment opportunities are not sure will appear every day, sometimes several times a year does not, we must try to be careful before investing, very confident when it admitted. In other words, you can guarantee that at least 30% or more of the real success rate can approach success rate is not high, be sure to watch the main.
(2) The risk / earnings ratio.
Correct choice of risk-reward ratio and profitability, depending on the actual success rate of our investment. As an example, I have in the last operation, the ultimate success rate of roughly 35%, then that is once every three investments to succeed. If you want to get long-term profitability, there must be two options, 1: To improve the success rate. 2: Only invest in a higher rate of increase in stocks. To continue to improve the success rate is not an easy thing, I can not make up their own investment, there is every two or three times a half of success. So we need to find ways to invest in higher-yielding stocks.
Because usually we have a loss of 4% -5% Investment Office, located stop bit, the risk is higher than the proportion of the loss is generally not admitted. So can be said that the cornerstone of every successful operation, the basic is to establish a loss of about 8%, based on (because we did not meet expectations as long as the minimum gain are called unsuccessful, and sometimes even wrong, it will not losses, so the loss in real terms is often less than 10%.) So, you want to have a long-term profitability, the right must be at least 20% of the profit margins can be considered when approaching the rate of return is less than this will not take into account approach, because the final approach means that trading losses. So every time I have at least a 1:4 ratio of risk and profitability under transactions.
Correct assessment of their own discretion, is a flexible application of risk / profit ratio guarantee. Must be correct to judge not regard themselves as too high or too low. Because if you have confidence in believing that their own can achieve very high success rate if, for example, the actual success rate of 50% or more, you can adjust your buying shares in the risk / earnings ratio of about 1:3, so you deal the opportunity to significantly increase the annual yield will be increased. However, I advise you should carefully evaluate your success rate in real terms, historical experience, any person who is expected to own the success rate of 50% or more in the long term, the result is usually disappointing.
Our investment premise is that it must seriously consider the above two premises, when a stock does not meet these two conditions, we have no consideration, regardless of the stock on the surface of how good prospects. When a stock in line with the above two conditions, we are ready for the best time rounded out the appropriate Shigekura. The depth position is based on objective analysis.
Sometimes, there is another case, that there is only one meet the above conditions, for example, we have a great ability to grasp the bullish a stock up, said earlier this take more than 30 % of success rate above 50% can be achieved even higher. But the fly in the ointment is that buying point and higher, once a mistake, stop-bit to buy point and tend to have 8% of the difference, plus handling fee can be up to 10%, far higher than we can afford the loss of , the risk / profit ratio is only 1:3 low.
This situation often occurs, sometimes very high success rate, but the risk / profit ratio of not a right. Sometimes the risk / profit ratio is extremely suitable, the event of a failure in a very small range where you can identify and stop, but it is not very high success rate. In short, some shortcomings. The advent of these opportunities is not an absolute can not invest, but should pay attention to two things, 1: input on the assumption that a perspective is extremely fit, while the other point of view is not that problematic. 2: You can not put a heavier position, only a small amount of intervention Qingcang Enough is enough.
When we can operate in strict accordance with the above method of operation, the control of access to stable income approach. But this is still not enough, because we want a stable pursuit of a breakthrough on the basis of profit.
