The stock market has “unwritten” principles that never change and investors need to firmly grasp them. So what are they?
Number 1: High-priced stocks will continue to rise and vice versa
Are you surprised to see stocks that keep going up year after year even though the price is already very high? On the contrary, there are stocks that have been trading at prices below $3 for years and years. If you hope to buy a stock at a really low price so that it will “in case” go up later, you are sorely mistaken. Don’t expect stocks under $10 to go up to $30. If they don’t reach $30, they’re far from $50.
Number 2: Brokers are not responsible for your assets
You, not anyone else, are solely responsible for your property. Stockbrokers work not only for your benefit, but also for theirs and the securities company. Most brokers are not happy if you buy a stock and hold it all year, no matter how profitable you are. That is not to say that there are rarely good and conscientious brokers. Before deciding which broker to stick with, learn about his or her trading history and past clients.
Number 3: Market trends are the deciding factor.
A lot of stocks fall when the overall market goes down. But the problem is that not all recover after that. Take a look at oil and gas stocks from 2014 to present. After spending the first 9 months of 2014, the oil and gas group plunged without stopping until 2 years later. So make sure you keep an eye on the overall market and act promptly when the market declines.
Number 4: Giants always leave big footprints.
Have you noticed the trading sessions where stocks surged with sudden trading volume? That could be a sign that the stock is being bought by large institutions. The problem is that with a large amount of assets, they can’t disburse in just one session, but have to buy and do it many times. That’s why you see a lot of these stocks going up after that. Not a single giant could hide his footprints. The advantage of the individual investor can track that footprint, evaluate and make decisions with flexibility.
Number 5: The market is always led by a group of stocks, which must be identified.
Each bull market will be led by a group of stocks. This group increased very strongly, creating a spillover to the whole market so that some other groups of stocks increased and then the index also increased. The group of leading stocks often increases several times as much as the general market does. That is, if the market increases 20%, this group can do up to 70-80%.
Number 6: When a leader has peaked, it’s time to consider exiting the market.
The group of leading stocks will rise first and create a spillover effect to the whole market. This group of leading stocks will increase for about 3 to 6 months and be followed by a market correction. At this time, the stock groups spread, the penny group was just near the peak. This is the time when you need to withdraw from the market because only 2 to 3 weeks, when the leading group has clearly gone down, the stocks will also peak in turn and the phenomenon of “discharge” will occur simultaneously on all of them.
Number 7: People trade based on emotion, or more accurately, the expectation that it will increase, not because of analysis.
When a new investment system is introduced, many people are often concerned, “What if everyone knows it?”. We shouldn’t worry too much about this, even if everyone knows it, only 20% of them do it, and only a few do it well. Most people make decisions based on emotions, so people don’t care much about the ABC investment system or something. People make decisions based on emotions rather than reasons. For a person to give up his emotions to trade according to a rigid, standardized system is a long and difficult process, even more arduous than creating an effective investment system.
Number 8: Not every supportive good news makes stocks go up.
When the stock goes up, the good news creates momentum for it to go higher. And when the stock has fallen, there are many people stuck in high price range, they just wait for the stock to rise a bit before they sell. The good news doesn’t save the stock either.
Number 9: In a downtrend, when you see the volume is exhausted, it is time to consider.
A falling stock means more selling than buying. When the volume is exhausted, it means that there are not many stocks to be sold anymore, the supply is not much, so be ready to buy.
Number 10: Greedy people always want to buy at the bottom and sell at the top, experienced people buy at a safe point (where they are likely to increase) and sell when the top is near.
According to the Rothschild, a powerful financial family: ““I never buy at the bottom and I always sell too soon.” When the market is up, experienced people often buy when the trend is certain and sell when they have made enough profit. Also known as “buy high, sell higher”.
