Pendulum principleThe so-called pendulum principle, in short, no matter what asset's **, it cannot always rise, nor can it keep falling, it will swing in a balanced way like a pendulum. The greater the degree of deviation, the greater the opposite correction, and vice versa. However, it should be noted that this principle is often rigorously applied by investors, who expect to be able to catch an inflection point in a well-defined unilateral ** and thus lead to huge losses. ** alone does not tell investors when there will be a change. To apply this principle accurately, it is necessary to grasp the fundamentals and combine them with the trends of technical analysis.
Waterbed principle
The waterbed is characterized by one side pointing downwards and one side protruding outward due to the pressure of the water. If a "waterbed" is compared to a complete financial market, the water in the "waterbed" is "money", and in different financial markets, the flow of money will also fluctuate over time. Assets** are driven by money, and in the short term, the fluctuation of funds is insignificant compared to the total amount of finance. Through the analysis and grasp of the capital flow between the sub-markets, we can determine the operation ideas of the best managers, and then grasp the long-term trend of the market. Reference indicators for analysis typically include stock indices, yield curves, CRB indices, etc. Of course, different markets have different characteristics and attributes, which also determines that it is generally difficult for funds to flow between markets with different attributes. In this way, we can divide the financial market into different levels and scopes according to different attributes, and analyze them separately using the waterbed principle.
Grasp the market focusThe direction of the market centerline is generally determined by a certain market focus, and the market is constantly looking for a changing focus as hype material. The market is constantly changing the focus. Of course, the change in the center of gravity of the market is also unconscious, and there can be no obvious dividing line. Inferences can only be made from the market** and some relevant information, and the possibility of incorrect inferences cannot be ruled out.
Discipline is paramountBefore investing, we need to understand the relationship between our own risk and expected return, and then we can determine the target entry point and stop loss point. Especially newcomers, as soon as they enter the market, they forget the original plan, and even if they remember, they may not be able to do it, especially when they are about to get close to the stop loss point, they will reach a compromise with themselves, temporarily change the set stop loss point, or cancel it directly, resulting in huge losses. In the ever-changing financial markets, you can't survive unless you have strict discipline and stop-loss points.
The market is always right
The biggest mistake investors make is often refusing to admit defeat in front of the market. Many people always pretend to be puzzled: this trend is not justified from any point of view, and it will soon be **, so refuse to stop losses. The smarter the person, the easier it is to be self-righteous, but remember that the market already contains all the information about the market, the market is never wrong, and you are the one who is wrong. Don't be self-righteous, don't have vanity, decide on a course of action based on the information given to you by the market, and admit your mistakes immediately if you make mistakes. This is how the market lasts forever.
Don't trust the rulesThere is no one way to invest for sure, and there is no formula that guarantees that you will make money. Otherwise everyone is a millionaire? It is believed that the movement of the market is cyclical, which is an assumption that history will repeat itself. Many professionals often study the ups and downs of history and believe that as long as this happens, the market will fluctuate up and down. But if you believe these ideas, ask yourself: Why have thousands of good people been studying for decades, but they haven't become rich? Perhaps, this will make your mind clearer and stop believing in the so-called rules easily.
Go with the flowAs a global market, even speculation with huge capital** cannot determine the market**, let alone individual investors. Therefore, the wisest thing to do is to follow the market trend and go against the trend, which is tantamount to using the mantis arm as a car. Due to human nature, ordinary investors are unwilling to believe that ** will rise and fall to a certain price, so they dare not chase up and down, and can't wait to enter the market to make a small profit when there are slight signs. If there is a loss, it will not stop the loss, and it will stay in the mud puddle in order to spread the average price.