Newbies die from chasing highs,
Experts die from bottom fishing.
So how should we bottom fish?
Bottom fishing needs to be cautious, because the price that seems to be the bottom may not be the real reversal point, and even veterans may fail because of this.
Bottom fishing is a strategy of decisively buying when the stock price plummets to a low valuation point, expecting it to rebound quickly. Here, "bottom fishing" means seizing opportunities, and "bottom" means the bottom of the price. In short, bottom fishing means taking action when the stock price hits the bottom. However, it is extremely challenging to judge when it is the real "bottom", and many investors have fallen into trouble because of this.
It is best to bottom fish when the stock price rebounds and buy at a low level when the trading volume is enlarged. This can effectively reduce the purchase cost and increase the probability of investment success.
When bottom fishing, it is best to have a buying point on the technical side, such as: MACD golden cross, KDJ golden cross, Bollinger line lower track support, etc. The appearance of these technical indicators can provide us with more accurate buying signals.
There is no bottom in a bear market, so when the stock price is in a short position, it is not recommended to bottom fish. In a bear market, the market is in a downward trend, and the risk of bottom fishing is relatively high, so it should be treated with caution.
When bottom fishing, you can wait until the decline slows down significantly before buying. For example: when the stock price falls to the annual line, gap, or historical low, the downward trend of the stock price slows down, and you can bottom fish in a small amount. This can reduce the risk of being trapped after buying.
Don't bottom fish those stocks with poor operating conditions and poor performance, which are likely to continue to fall. Choosing stocks with solid fundamentals and good performance can increase the security and profitability of investment.
It is not recommended to buy in full when bottom fishing. If the stock price falls after buying in full, it will be difficult to get out of the trap at this time. Reasonable fund management is the key to successful investment. It is recommended to buy in batches and gradually build positions.
When bottom fishing, you also need to pay attention to the overall trend of the market and the flow of funds. If the overall market trend is downward, even if there is a technical buying point for individual stocks, you should be cautious. At the same time, paying attention to the inflow and outflow of funds will help judge the trend of individual stocks.
Bottom fishing is not a frequent operation, but a long-term investment strategy. Investors need to have enough patience and confidence to wait for the right time to appear before bottom fishing.
During the bottom-fishing process, pay attention to risk control and set a good stop loss point. Once the stock price falls below the stop loss point, it should be sold in time to avoid further losses.
Bottom-fishing requires investors to have certain investment experience and skills. For novice investors, it is recommended to conduct bottom-fishing operations after fully understanding the market situation and the fundamentals of individual stocks.
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