"Do not sell when the price surges, do not buy when it plunges, and do not trade when the market is stagnant" - this principle succinctly reveals the secret to success. It is the simplest and most fundamental truth, yet it is also the most essential and effective. Without understanding this principle, even if one trades a thousand times, they are no more than a blind man riding a blind horse in the stock market, inevitably facing a tragic end. Before starting, one must recite this principle silently and keep it firmly in mind.

Over time, by developing a habit, one can become as strong as steel through repeated tempering. The first two parts are easy to understand, but the latter part, "do not trade when the market is stagnant," is particularly important to note in warrant trading. When trading during a stagnant market, if the market reverses, you will inevitably have to stop losses or chase the rise, both of which are undesirable. During a stagnant market, the price difference is not significant, and if you lack patience and trade multiple times, it will inevitably lead to a loss in transaction fees.

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The essence and rules of the stock market:

In any industry, as long as one is good at grasping the essence of the problem, the hope of success will be greater. The essence of the stock market: This market is not a market that can be fully invested in; everyone comes here for speculation and profiteering, with a large speculative component. That is to say, this market is a speculative market. When we enter this market, we should focus on speculation and view the market from a speculative perspective. In the operation of the Chinese stock market, the following rules should be established and adhered to in terms of concept.

1. Risk First Rule

Most investors often think more about how to make money, but they rarely consider how to prevent losses. In a speculative market, controlling risk should be the top priority. If you cannot avoid the risks of speculation, you cannot earn investment money. Therefore, the correctness of concepts and methods should be based on risk control. Regardless of whether you make money or not, the first thing to consider is how not to lose money. When there is a risk, the main thing to do is to avoid it first, rather than taking risks. Only by ensuring that there is no loss can one talk about making money. When there is a risk in the overall market and individual stocks, one should first avoid it and operate when the opportunity is greater than the risk. Do not do it when you can't understand it or when you are not sure, and be determined to do it when you are sure. It is impossible to grasp all the opportunities in the market.

We should remember the following content.

(1) If the probability of making money is high and the probability of risk is low, it is correct; if the probability of making money is low and the probability of risk is high, it is wrong.

(2) If the probability of making money is high and the probability of risk is also high, it varies from person to person and from market to market; it is good when the market conditions are good and the individual has a deep foundation.

(3) For those with a low probability of making money and a similarly low probability of risk, there is no need to operate.Remember: There are no magic tricks in the stock market, only a relative technique that combines concept, method, and psychology.

2. The Law of Quantitative and Qualitative Change

The development of things is always from quantitative change to qualitative change. The change in the trend of stocks is a process from quantitative change to qualitative change. The fundamental reason for the reversal is that the transformation of the quantitative change between the bulls and bears has reached an extreme point. The reason why the trend can be maintained for a certain period after its formation is due to the process of the release of the forces of bulls and bears.

(1) In the process of the accumulation of bullish forces (consumption of bearish forces), pay close attention to the turning point of qualitative change and intervene in time.

(2) In the process of the release of bullish forces (accumulation of bearish forces), pay close attention to the fatigue of the bullish forces and reduce positions at high levels.

(3) When the transition from bulls to bears occurs, it is necessary to empty the position in time to avoid risks.

(4) In the process of the release of bearish forces, as long as the bearish forces have not been completely released, try not to participate.

Note: The transition from quantitative change to qualitative change is also the process from gradual change to sudden change.

3. The Principle of Internal and External Causes and the Principle of Necessity and ContingencyThe operation of stocks is propelled by both internal and external factors. Internal factors are the fundamental elements of stock market changes, while external factors are merely the conditions for change.

Internal factors include: economic development, corporate performance, the accumulation and transformation of bullish and bearish forces, etc.

External factors include: policy changes, domestic and international incidents, corporate incidents, etc.

Remember: A single success cannot be used as a necessary method.

4. There are no simple rules in the stock market

The reason why there are fewer winners and more losers in the stock market is because there are no simple rules to follow.

We need to remember the following content.

(1) There are no simple trick rules. A comprehensive dialectical dynamic trading system must be established.

(2) The rules of successful experience. Successful experiences have characteristics of timeliness, conditionality, environmentality, and reference.

① Timeliness: Experience is a successful experience formed at a specific time, and changing the time may turn it into an unsuccessful experience.Translate the following passage into English:

② Conditionality: Experience is formed under specific conditions and environments. If the environmental conditions change, the original experience must be adjusted accordingly.

③ Reference: Theories in the stock market are based on the unchanging factors of the market, while experience does not possess long-term stability and time effectiveness. Therefore, experience only serves as a reference.

Thus, when applying experience, one must carefully analyze the conditions and environment, and flexibly apply it according to the situation, timing, conditions, and environment. It is necessary to view the stock market and experience with a comprehensive, dialectical, dynamic, and developmental mindset.

Remember: The stock market is dynamic, not static.

5. Winning methods must have usage obstacles

If there were no obstacles in using the money-making methods, then most people would have succeeded. The stock market is a place where people gather and compete for money. There must be obstacles in technical competition and money contention.

Obstacles are divided into: natural and artificial. Natural obstacles are caused by the market's own laws. Artificial obstacles are mainly designed by the market's main forces. However, this does not mean that there are no rules in the stock market. It only means that the stock market does not have simple rules. The stock market itself is knowable. The key issue is to grasp the unchanging laws of the market, make full use of this unchanging law, and make money in the stock market while controlling risks. The laws in the stock market are often used, especially some classic theories, to deceive investors. But some laws in the stock market cannot be used, and one must learn to use these unchanging laws, especially medium and long-term laws.

The stock-holding mindset developed in a bull market is wrong if it is still adhered to in a bear market; at the end of a bear market, that is, at the beginning of a bull market, knowing that one cannot hold stocks is also wrong. Therefore, the main forces use this slow change of people's thinking as a rule to make investors hand over their chips at the end of the bear market, and hold stocks at the end of the bull market, thus making money from investors.

After 15 years of stock trading, after being beaten by the stock market for many years, I used a very simple method, which is to only do one kind of MACD pattern. I do more when the market is good, and less when the market is not good. In the first few years after graduation, I made tens of millions from 70,000, and with some income from my wife, life is quite good. The method is very simple.In summary, there is a catchphrase: "Big in front, small behind, diverge and go! Big in front, small behind, diverge and run!"

Because the exit point is quite accurate, but the entry point is still a bit off, so I improved it a bit and am now sharing it with everyone, hoping it will inspire you all!

Let me explain the catchphrase first: "Big in front, small behind, diverge and go," is an entry signal issued when the MACD is underwater, and "Big in front, small behind, diverge and run," is an exit signal issued when the MACD is above water.

Here is a detailed explanation:

Firstly, if the MACD issues an entry signal below the 0-axis, "Big in front, small behind, diverge and go!"

1. The stock price is in a downtrend, the MACD green column enlarges, after a rebound, the stock price falls again, and the MACD green column also enlarges. However, at this time, the green column is visibly much smaller than the first green column and is below the 0-axis. Big in front, small behind, if the stock price also shows a divergence phenomenon at this time, this is a confirmed buy signal.

2. If the MACD parameters are not improved, buying according to the above conditions, after meeting the conditions for buying, the stock price may fall again, and the success rate is not very high.

3. At this time, we add an entry condition. When the MACD green column is big in front and small behind, after the stock price diverges, the short-term 5-day moving average, 10-day moving average, and 20-day moving average, the three moving averages form a golden cross before starting to intervene. In this way, we can filter out a lot of false entry signals, avoid being trapped after getting involved, and thus improve the success rate of trading.

Secondly, if the MACD issues an exit signal above the 0-axis, "Big in front, small behind, diverge and run!"

The stock price is in a bull trend, the MACD red column enlarges, then enters a shock adjustment market, the stock price returns to the rising channel again, and the MACD red column continues to enlarge. However, the second red column is visibly smaller than the first red column, which is the big in front and small behind above the 0-axis. If the stock price shows a divergence at this time, this is a signal to close the position and exit.The most typical poor mentality in the stock market, no wonder most retail investors can't make money:

1. Like to bottom-fish, especially for stocks at historical lows. Seeing that their own cost is lower than others, it is simply blossoming in their hearts. However, they did not think that since a stock has already hit a historical low, it is very likely that there will be many new lows, and even your stock may be halved in a few months. Bottom-fishing, bottom-fishing, and finally, you end up bottom-fishing yourself to death.

2. Reluctant to cut losses. There are many articles on this issue. Some retail investors see that after cutting losses once, the stock price rises again in a few days. Next time, they will have a fluke mentality and no longer cut losses, which is not acceptable. For me, I absolutely do not allow a loss of more than 5%. "Cut losses and let profits run" is indeed a wise saying. But on the other hand, if you don't have your own profit model, your ending is to buy, cut losses, and then buy and cut losses again.

3. Dare not to chase high. Many retail investors have a fear of heights, thinking that the stock price has already risen, and what if they are trapped after chasing the rise? In fact, the rise and fall of the stock price has no necessary connection with the height of the price. The key lies in the "trend". After the uptrend is formed, the safety of intervention is very high, and the profit in the short term is great. The core issue is how to determine whether the uptrend has been formed. There are different standards in different market environments, such as in a big bull market, stocks that create new highs with large volume are good stocks, while in a weak market, this is often a bull trap. The ability to judge the trend is one of the important standards to measure the level of a trader.4. Fear of chasing market leaders. When a stock begins to rise, we are unsure whether it is a market leader. By the time it is recognized as such, it has already gained a certain amount. At this point, retail investors often hesitate to follow suit and instead opt for a stock with a small increase, thinking they can profit steadily. However, these stocks tend to rise slowly and lead the decline when the market falls, resulting in no gains after all the effort. In fact, in a strong market, the stronger the stock's rise, the more followers it attracts, making the ascent easier. After reaching its peak, the stock will also have a considerable period of consolidation, giving you enough time to exit. Of course, if the increase is too large, it is not advisable to enter rashly.

5. Fondness for predicting the overall market. Except for a few rare cases where the market is bound to rise the next day, the short-term trend of the overall market is actually unpredictable. This means that the market forecasting programs that retail investors pay attention to daily are not very meaningful. For friends who trade individual stocks based on the overall market, I think it is more meaningful to divide the market into operable and non-operable segments. There are many specific methods for differentiation, such as the 30-day moving average, MACD, or some more sensitive indicators.

6. Holding too many stocks, mainly due to the lack of one's own stock selection method, relying on recommendations from others. Today, a friend says this stock is good, and tomorrow, the TV says that stock is also good, resulting in holding more than ten stocks at once, making oneself busy and disorganized. Some also say, didn't Gann say to divide the funds into ten parts? Ah, that's for large funds. Do you, a small retail investor with only tens of thousands of yuan, also need to divide it into ten parts? I believe that it is more appropriate for retail investors to hold about three stocks.

7. Lack of a systematic understanding of the main force's operating methods, stock trading is like a blind man touching an elephant, without any rules, and can win a few times when lucky, but will be defeated when unlucky. Therefore, retail investors are always the ones who sing "Why am I always the one who gets hurt."

8. Unwilling to miss every opportunity, rush in as soon as the market rises a bit, without knowing how much chance of winning they have, and end up being trapped again. In fact, this is due to a low level and lack of confidence. If you have several profit models suitable for different market environments, then no matter whether the market rises, falls, or consolidates, you have a steady way to profit. You can calmly wait for the uptrend to form before entering and minimize the risk.

9. Unable to distinguish between the operating methods of bull and bear markets, retail investors always have a bullish mindset, always thinking that the market will rise the next day. This mindset has made everyone suffer a lot in the big bear market after 2001. In fact, in the Shanghai and Shenzhen stock markets, the bull market is short and the bear market is long is the unchanging main melody. Institutions like to be bullish because only when retail investors are bullish do they have food to eat. For us retail investors, it is most important to keep an eye on your wallet. What we need to do is to be like a cheetah, never act when the time is not right, and once we act, we must have at least a 70% chance of winning. In the Shanghai and Shenzhen stock markets, there are actually some methods with a win rate close to 100%, although the frequency of occurrence is low, but if you can seize them, they can also bring you an average of about ten points of profit per year.

Share what you know and learn, take all beings as a mirror, and all things as a teacher, to improve your realm while encouraging each other with all retail investor friends! If you like the above article, or want to learn more about stock market investment experience and skills, you can follow the public account "Fengyue Xianxu", full of dry goods!