Can one really get rich by trading stocks?

Firstly, I would like to state my view that it is possible, but it may require a greater cost than succeeding in other industries. Since I have said it is possible, there must be a method to it. Below, I will share some of my insights on the stock market, hoping to help everyone avoid some detours.

1. Before you enter the market, you must have the right concept, that is, the stock market can achieve your life goals and is a place where you can get rich in a short time.

When you hear this view, it is likely to subvert your values, because even the legendary investor Warren Buffett's annualized return is only just over 20%. Before entering the market, you often hear that the stock market is very risky, and trading stocks is equivalent to gambling, which everyone avoids and detests. It feels like money is safest only when put into the bank, even if the interest rate can't keep up with the annual inflation.

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But in fact, according to relevant statistics, 10% of the rich class actually comes from professional stock traders. You can search on Baidu if you don't believe it. So everyone must first have a belief that I come to the stock market to get rich, not to lose money and be scolded. Only with this strong desire to get rich can you make achievements in the stock market in the future.

2. The stock market cannot be predicted, and how to respond is the most important thing.

There are often some fraudsters in the market, giving everyone a stock pool, and then after a few days, as long as the stocks in it rise, they start to show off to prove how powerful they are. There is also a type that can predict specific prices, even accurate to the decimal point. For the above two so-called traders and financial influencers, everyone must keep a distance. Don't pay attention to this kind of information in the future, because you don't know if you will be bewitched and buy it one day, no matter whether you make a profit or a loss, you will be the loser in the end.

What we pursue in stocks is not to be correct every time, but to strive to avoid losing less and earning more. You can set a goal for a month as a unit, and get closer to this goal each time. When operating normally, you should take appropriate measures according to the actual trend of the market, and in the long run, stock trading will become a simple thing.

3. The accumulation of capital is a certain process, and it will naturally reach a new level after a certain period of time.The accumulation of assets varies for each investor, hence the time to achieve stable profits also differs. Some may take 3 years, others 10 years, and some may still be incurring losses even when their hair has turned white. In fact, most people, as long as they are well-prepared in their daily lives, can soar to great heights when the bull market arrives. Just like in the stock market, traders such as "Stock Trading to Support the Family," "Qiao the Boss," and "Ruihe Immortal," all started with hundreds of thousands or millions and by 2015, they had already exceeded a hundred million. Seeing these examples, does everyone feel their confidence restored? In fact, I believe that what a stock trader needs most is confidence and conviction. With them, no matter how many difficulties they encounter, they can overcome them!

The MACD indicator is one of the most important and useful indicators among numerous technical indicators. As one of the ancient technical analysis indicators in the market, MACD is sought after by many investors for its ease of use and stability. Let's systematically understand its usage.

I. MACD Buying and Selling Techniques

1. Bullish Eye (Buy)

The invaluable MACD trading rule: "Buy on the bullish eye, run on the bearish eye," just ten words, those who understand say it's worth a fortune, and it can be called a classic.

When the DEA is in an upward state or changes from rising or falling to a flat state, and the DIFF crosses down through the DEA and then quickly crosses up through the DEA, forming a gap between the two lines, it is called the "Bullish Eye," which is a better buying point. This pattern can be divided into three types based on the 0-axis: above the 0-axis, near the 0-axis, and below the 0-axis (if there are double eyes, the later increase is greater).

2. Bearish Eye (Sell)

When the DEA is in a downward state or changes from rising or falling to a flat state, and the DIFF crosses up through the DEA and then quickly crosses down through the DEA, forming a gap between the two lines, it is called the "Bearish Eye." When encountering this pattern, it is necessary to resolutely sell. On November 18, 2017, the stock code 002194 showed a bearish eye, and the later decline was intensified. (Double eyes will lead to a greater decline later)MACD Selling Technique Signals

I. DIFF Line Forms a Death Cross with DEA Line Below the Zero Axis - Sell on the Day of the Death Cross.

Selling Point Elaboration: (1) If the death cross pattern of the MACD indicator appears below the 0 axis or in the vicinity of the 0 axis, it is a very strong selling signal. If the death cross of the MACD indicator occurs at a high position above the 0 axis, it indicates that the stock price is still in an upward trend. Although the bearish side has temporarily gained the upper hand, the long-term upward trend of the stock price is still difficult to change in the short term.

(2) When the MACD death cross appears near the 0 axis, it indicates that the bulls have overcome the bears while the market trend shifts from an uptrend to a downtrend. The bearish signal strength of the death cross pattern at this position is greater than that of the death cross pattern below the 0 axis.

II. Top Divergence Between DEA Line and Stock Price - Sell When the Stock Price Falls.

Selling Point Elaboration: (1) While the stock price continues to reach new highs, if the trading volume gradually shrinks, it confirms the signal of insufficient bullish strength. In such cases, the bearish signal of the divergence pattern is more reliable.

(2) The higher the position of the DEA line at the beginning of the divergence pattern, the more reliable the bearish signal of the pattern. If the last divergence occurs simultaneously with the death cross of the DIFF line and the DEA line near the 0 axis, the selling signal of this pattern is even stronger. At this time, investors should sell all their stocks in hand without waiting for a second selling point to appear.

III. When the MACD Histogram Turns from Red to Green - Sell When It Turns Green.Selling Points Detailed Explanation:

(1) When the MACD histogram turns from red to green, if the trading volume gradually decreases, it is a confirmation of the lack of strength on the bullish side. In this case, the bearish signal of this pattern is more reliable.

(2) The longer the MACD histogram remains above the 0-axis before turning green, the greater the potential space for the stock price to fall in the future.

(3) If the MACD indicator shows a divergence pattern with the stock price at the 0-axis and then turns green, the bearish signal of this pattern is more intense. Under such circumstances, investors should clear their stocks as soon as possible, without waiting for the green column to gradually lengthen.

MACD Buy Signals

1. Buddha's Hand Upward

MACD parameters are 12, 26, 27

Buddha's Hand Upward: From the above chart, it can be seen that after the white DIF and the yellow DEA form a golden cross, they rise with the stock price. Subsequently, as the stock price retraces, when the main force washes the plate, the stock price retraces, and the yellow DEA line, after retracing to near the MACD line, the white DIF turns upward, making the overall trend of MACD form a Buddha's hand upward pattern. The buying point is shown in the figure, and the pattern is similar to: MACD turns red for the second time, MACD is about to die but not dead.

2. Little Duck Out of the WaterMACD parameters are 12, 26, 27.

Little Duck Out of Water: After the DIF crosses the DEA line to form a golden cross below the zero axis, it does not cross the zero axis or just slightly crosses it before returning above the zero axis, then forms a death cross with the DEA line. After a period of trading days, the DIF crosses the DEA line again to form a golden cross. This pattern is a bottoming pattern that appears after the stock price falls and finds a bottom, and the selling pressure is exhausted, which can be understood as a signal of a bottom rebound.

3. Strolling in the Clouds

MACD parameters are 12, 26, 27.

Strolling in the Clouds: The DIF line forms a death cross with the DEA line above the zero axis and continues to cross the zero axis, then forms a golden cross with the DEA at or above the zero axis. The K-line pattern at this time is usually crossing an important moving average. The formation of this pattern is when the stock price is consolidating on the way up after finding a bottom, and some are bottoming patterns, showing an upward attack, which can be understood as a positive entry signal. The best buying point can be when the MACD yellow and white lines form a golden cross near the zero axis, and the trading volume increases on the same day.

4. Swan Spreading Wings

DIFF forms a golden cross with the DEA line below the zero axis, then does not cross the zero axis and retraces, approaching the DEA, the MACD red column shortens, but does not form a death cross with the DEA before turning upward again, and at the same time, the MACD red column lengthens, forming the Swan Spreading Wings pattern. The formation of this pattern is a bottoming pattern, which appears after the stock price falls and finds a bottom, and the selling pressure is exhausted. It can be understood as the main force's construction area, and one can choose the right time to enter.5. Air Cable

The DIF line of the MACD previously crossed the DEA line to form a golden cross below the zero axis, and then operated above the zero axis for a period of time. Subsequently, the stock price retraced, and the DIF also began to retrace downwards. When the DIF adjusted to the DEA line, the two lines merged into one line. When they separated again and diverged in a bullish manner, a buying point was formed, and a new uptrend would begin. The appearance of this pattern is mostly for the upper consolidation, with the main force simply washing the plate. After a brief consolidation during the rise, the stock price shows a strong offensive pattern. The best buying point for this pattern is when the two lines of MACD, yellow and white, merge from two lines to two lines above the zero axis, and the volume forms a volume increase on the same day.

6. Air Tram

The DIF line crosses the DEA line to form a death cross above the zero axis, but does not pass through the zero axis. After a few days, it crosses the DEA line to form a golden cross above the zero axis again. The appearance of this pattern is mostly for the offensive consolidation, with the main force washing the plate, and the main force cleaning the profit chips in the short term. After a brief adjustment, the stock price shows a strong offensive, with a large momentum. If the technical pattern of the air tram is formed, it can be bought on the same day when the volume increases.

7. Undersea Cable

The MACD has been operating below the zero axis for a long time. After the DIF line crosses the DEA line to form a golden cross, the two lines do not rise strongly, but merge into a straight line with the yellow DEA line. At this time, once the two lines begin to diverge in a bullish manner, it can be bought.

Selecting StocksFirstly, retail investors primarily select stocks through candlestick charts, as the intentions of the main force are written on the candlesticks. The trend of a stock's candlestick should conform to a good technical pattern, which is clear and understandable in a bullish arrangement.

It is best to choose stocks that rise along the 20-day or 30-day moving average in a sloping manner. Stocks with violent fluctuations up and down in their candlestick charts are not selected, as it is difficult to understand the intentions of the main force. For example, see the chart below:

Secondly, in terms of policy, it is the industry supported by the national policy.

Selecting stocks from these two aspects may not yield as high gains as some individual stocks, but in the long run, the returns will far outweigh the risks. In the stock market, not losing money comes first, and making money comes second.

For observation convenience, filter out the weak and keep the strong in the stock pool for stock selection operations, with no more than 3 stocks in the stock pool, and no more than one stock in actual operation. Thoroughly understanding and doing well with a single stock can also yield remarkable returns.

After selecting the stock, choose the duration of holding the stock or cash based on the overall trend, and make full analysis and familiarization with the stock's characteristics to operate in waves.

To excel in a single stock, it is crucial to avoid the temptation from other stocks, especially the hot leading stocks of a period. Chasing hot spots is a matter for short-term experts. If you do not consider yourself a short-term expert, I suggest you not to be envious of that kind of money. Be honest and cultivate your own field. It is quite good to only do one wave a year.

In this way, there is no reason not to make money.Holding a stock long-term and persistently engaging in daily T+0 trading theoretically promises substantial returns over a few years, with the potential for gains of several times the initial investment. However, this process requires meeting certain necessary conditions.

Firstly, the stock you hold should be supported by solid performance and have a positive medium to long-term trend. If the company's performance is poor and problems are incessant, even with exceptional skills, it is challenging to withstand the relentless downward trend. In the market, it is essential to go with the flow.

Secondly, ensure the success rate of T+0 trading. Successfully executing intraday T+0 can continuously reduce the cost of holding the position, but failure will increase the cost. Therefore, to engage in daily T+0 trading, you must have strong market analysis skills and operational discipline. You need a comprehensive understanding and application of technical analysis, not just casual buying and selling. You should be meticulous about minor fluctuations during the trading day to ensure the success rate of your trades.

Thirdly, do not engage in T+0 trading for the sake of it. Do not force daily T+0 trades. Sometimes, the stock price fluctuates minimally within a day, moving just a few cents up or down, which is not suitable for T+0 trading. Forcing T+0 trades in such situations is essentially paying commissions to brokers, with the gains from T+0 trading not even covering the transaction fees and stamp duty.

Fourthly, focus on the methods and timing of T+0 trading. When the market is favorable, trade with a full position; when the market is unfavorable, trade with a half position. Look for opportunities to engage in T+0 trading, such as when the stock price suddenly surges by seven or eight points without hitting the upper limit, it will definitely fall back, potentially by more than 3%. This is the time for selling high and buying low. If the opening trend is weak, and the stock price is under pressure with the probability of falling continuously increasing, it is necessary to sell in advance and buy back after the stock price has plummeted to a certain level.

Therefore, holding a stock and continuously engaging in T+0 trading can theoretically yield significant profits, but it is based on the premise of good stock selection and operation. Otherwise, you may end up with the opposite outcome, not making a profit but suffering huge losses. Of course, those who do not have the ability to perform intraday T+0 operations can also choose swing trading, which is also a way of repeatedly trading a stock with relatively lower risk.

A complete trade includes analysis and forecasting, plan formulation, trial trading/position establishment, position scaling, position reduction, and position closing.

When a trend first emerges, the rate of increase is often slow because there is still a divergence of opinions in the market at this time. We can only buy a small amount tentatively to prevent significant losses due to incorrect judgment. As the trend gradually becomes clear, the price will rise at a faster rate, and at this time, you can boldly increase your position. In actual operations, we can control the position through the following methods:

1. Conservative approach: The conservative approach is to invest less capital at the beginning and end of the trend, and more capital in the middle of the trend, which is the market situation that most investors can grasp the most easily. For example, we can divide the funds into 10 parts and gradually build positions in the ratio of 2-3-3-2 or 3-5-2.

2. Aggressive approach: If investors are very confident in their judgment and have high expectations for returns, they can invest more capital at the beginning of the trend to seize most of the market situation and maximize returns. For example, build positions gradually in the ratio of 4-3-2-1 or 5-3-2. Since the amount of each position is less than the previous one, this position-building method is also called the pyramid △ method.3. Fixed Amount Method: If an investor believes that their ability to grasp trends is poor, or they do not have much energy to observe the development of the market, they can adopt this relatively simple method of establishing a position. That is, invest a fixed proportion of capital each time, such as one-third or one-fourth. For short-term operations, it is recommended not to exceed 20% of the total capital for a single stock, and it is appropriate to be between 10-20%. It is not advocated to enter and exit the market with a full position.

Finally, you must learn to respect this market!

Always be an honest and objective person in the market, neither deceiving others nor deceiving yourself. Sincere dialogue with the market, love the market, learn to be friends with the market, the market is a school that can never graduate, always maintain a modest and cautious attitude, be humble and patient, maintain a normal heart, be an ordinary person, and always have a heart of awe for the market.

Form your own trading decision-making system, have your own eyes to see the market, have a certain insight into the market, it is best to have some foresight, only listen to your own inner thoughts when trading, try to exclude external interference, in short, respect the market, believe in yourself.

Trading is a matter of profit and loss, just like fighting, victory and defeat are common in the military, this time you made money, the next time you lost money, as long as the final account is calculated, make money more often, lose money less often, make more when you make money, lose less when you lose, this can lead to victory, don't lose a big principal at once, it's not easy to make up for it.

If you want to make a profit in the Chinese stock market, you have to go through the tempering, how to temper? You need to learn more and operate more, this is the tempering of yourself, and if you always listen to others' recommended stocks, you will sooner or later die in the hands of others, so in the final analysis, if you only rely on others in the Chinese stock market and do not learn, I can only kindly advise.

It is difficult to understand in trading, stop at emotions, break in action, be lazy in dependence, be fast in independence, be chaotic in pulling people, profit in following the right, suffer in working alone, be clever in leveraging, lose in selfishness, make mistakes in blaming, win in self-examination, be poor in not changing, be tired in blindness, be expensive in paying, lose in arrogance, lose in less learning, fail in giving up, and succeed in persistence. Investment is actually a long process of self-management.

Remember the ancient rule of the market: terminate the loss position as soon as possible, and hold the profit position for as long as possible. Another important rule is not to let losses occur on the original profit position, facing the sudden reversal of the market, it is better to close the position without profit than to let the original profit position become a loss.

In the face of losses, remember not to rush to open a reverse position to make a comeback, this will often only make the situation worse. Only when you think that the original prediction and decision are completely wrong, can you close the loss position as soon as possible and open a reverse new position. Don't play the guessing game with market changes, missing trading opportunities is always better than incurring losses.