Why is it said that the most important thing in stock trading is to protect the principal? How to protect the principal?

A big reason why retail investors lose money is that when they enter the market, they want to get rich suddenly, but they don’t know the importance of protecting their principal, and they don’t know how to protect their principal. 1. The importance of protecting principal

To put it simply, if the capital is gone, there is no way to make a comeback. To understand a simple mathematical knowledge. 100,000, a loss of 50, and a profit of 50,000, but 50,000, to return to 100,000, you need to make a profit of 100! If you lose 70 and have 30,000 left, you need to make a profit of 233. Therefore, if the loss is more than 70, there is basically no hope of recovering the capital. 2. How to protect principal

First, learn some theory

As long as you know nothing about the stock market and cannot analyze fundamentals and technical aspects, you can only listen to the news and rely on it. Introduction and feeling: Loss is inevitable when entering the stock market. This business is actually the same. If you don’t know anything about an industry, will you invest blindly? After all, we need to conduct market research and have an investment plan, right? Second, choose good stocks

As a retail investor, it is better to choose about 3 leading blue-chip stocks in different industries. Those conceptual hot topics are not for retail investors at all. Because there is no financial advantage and no technical advantage, why should we still play short-term in hot spots? Third, grasp the turning point

That is the timing of buying and selling. To enter the stock market, you must at least know what a bull market and a bear market are like. At the end of the bear market, when no one was talking about stocks, technically the 250-day moving average just started to rise. Then hold it in the medium and long term until the bull market ends, and sell short when the bear market comes. What are the characteristics of the end of a bull market? That is when everyone is making money and the index has risen by more than 70, or even doubled. Fourth, strict discipline

Set a few rules for yourself: do not buy stocks in a bear market, wait for short positions. Only buy high-quality leading stocks and stocks with upward trends. If the mid-term trend changes, you must stop losses.

To preserve the principal, the above points are enough. The key is to control your hands, otherwise there is nothing you can do.

In stock trading, principal is the same as human life. If there is no principal, then everything is lost. In the market, I often say this: If you don't lose money, you will be half the loser. There is also a law in the stock market: one profit, two draws and seven losses. If you can protect your principal well, you will beat 70 people. So how to protect the principal?

First, learn to take short positions. There is a very philosophical saying: The best trade is no trade. An important reason why most retail investors continue to lose money does not lie in the market nor their skills. In fact, it lies in frequent transactions. Frequent transactions cause a large increase in the error rate. Even if you make some money, it will be handed over to the brokerage. Therefore, if you learn how to short positions, you have actually learned how to protect your principal.

Second, only do transactions that you can understand. Stock trading is indeed about fighting expectations. But if you can have a certain logic and clear understanding of this expectation, you can trade. If the understanding of this expectation is vague, or even an unknown guess, either your transaction is dangerous. Your ignorance puts your principal in extreme danger. Such behavior is the most harmful to your principal. Therefore, to pursue stock trading, you must have a clear and rational understanding. In other words, if you can understand it, I will do it. If you can’t understand it, you will not do it.

Third, resolutely implement trading discipline. The main trading discipline referred to here is the concept of stop loss. No matter what kind of transaction you do, the first thing you should think about is how to set the stop loss line? In other words, I made a mistake, what should I do? This thinking must be clarified before trading, and must be implemented unswervingly during the trading process. The most taboo thing is to give yourself reasons, hope, and explanations. Only in this way can you effectively protect your principal.

In short, protecting the principal is the basic principle of a stock market trader. Only by protecting the principal well can we realize the maximum profit when the market comes, otherwise everything will be worthless. Wood, sourceless water.

Only by preserving your principal can you gain a foothold in the investment market. Only then can we have the opportunity to deal with the market, and only then can we have the possibility of defeating the market. Those who do not pay attention to risk control and preservation of principal will be kicked out of the market in a few years.

How to keep your principal?

I think the most important thing in preserving principal is not some stock picking trick, nor any firm stop-loss discipline.

The most important thing to protect your principal is to put your funds in a position where you can move forward and retreat freely.

What is the position of funds’ freedom of advance and retreat?

In terms of positions, the funds used for trading are less than half a position most of the time. When we talk about this, stock friends will say: You are wasting the efficiency of the use of funds.

No.

The Tao Te Ching says: 30 bars make a wheel. It is precisely because the middle is empty that the wheel can function. When utensils are made of clay, it is because the middle is empty that they have the meaning of utensils. A house is made by cutting out doors and building walls. It is precisely because the middle is empty that it can be used for living. This is the role of "nothing".

Only by always leaving some idle funds when trading stocks can you use the strategy of free advance and retreat when trading stocks. If the position is full or heavy, it will become a one-way force that can only rise but not fall. Since the position is always low, the loss if you make a wrong judgment is limited. Because there are idle funds in reserve, you can quickly revive with full health and find another opportunity to fight again.

In terms of trading strategy, only invest funds in safe stock prices or points. Instead of predicting which position is likely to earn more.

This means that funds must be kept alive. Only in this way can the maximum safety of principal be ensured. The dead place in stock trading is the stock price or index that has increased more than one or two times after the violent speculation. Stocks with inflated valuations and stocks at risk of delisting. Although these risky stocks and indexes are still skyrocketing, they are still full of temptations. But for the safety of funds, investors must not take risks. Remember that the principal will never die. Funds should only be invested in companies with simple businesses, good development prospects, and stocks that have not yet been speculated. Stay away from speculation, embrace undervalued stocks, and plan for the long term rather than worrying about small immediate gains and losses. . . . There are so few likes on Q&A recently. Likes will improve my Q&A ranking. Your likes are my motivation for writing. I hope you will like more! After reading this, give me likes and I’m rich. Thank you for your attention!

The most important thing in stock trading is to protect the principal. This is very correct, and I strongly agree with it! The three points put forward by the stock god Buffett are: first, principal safety; second, principal safety, and third, remember the first two points; even the most influential figures in the stock market agree that protecting principal is the most important thing for stock traders, and there must be a reason .

If you look at these data, you will know why the most important thing in stock trading is to protect the principal: How to protect the principal

The best way to protect the principal is to stay away from the stock market or wait and see with a short position. That's right, this is the best way to protect your principal. However, if you stay away from the stock market or wait and see with a short position, you will lose the value of your investment in the stock market and lose the opportunity to invest in the stock market. Therefore, if you want to protect the capital of stock trading and do not want to miss opportunities in the stock market, you can only protect the principal from the following points.

First: Reasonable allocation of positions

People often say that diversified investments should not put eggs in the same basket. This reflects the importance of reasonable allocation of investment positions. When should you still have a short position, when should you take a light position, when should you take a heavy position, and never fill your position. Risks are everywhere in the stock market. Once your position is full, you will lose the opportunity to move.

Second: Have strict discipline

When trading stocks, you must clearly understand the general trend. If the general trend is bullish, you can take heavy positions. In a bear market, it is best to wait with a short position, and in a volatile market, you can play with a small position; One is that stocks must have stop-loss and stop-profit points, especially stop-loss points, which are very important. This is the key to protecting the safety of principal; the other is that individual stock buying and selling points have a plan and purpose, and when should you buy and when should you sell.

Third: Recognize the general trend and recognize yourself

When trading stocks, you must follow the general trend and follow the general trend, and do not go against the trend; at the same time, you must also recognize yourself when trading stocks. Ability, you must be clear when buying and selling stocks, don’t buy if you don’t understand, and don’t do luck-based stock trading. This is a good way to protect your principal when trading stocks!

Investment is risky, and you need to be cautious when entering the market; this slogan has already reminded that there are risks in stock trading, and if you have risks, you will face losses. Therefore, if you want to find a way to avoid losses, you must keep your principal safe, and even your principal is safe. If you can't protect it, what qualifications do you have to talk about profit? Therefore, it is very correct that the most important thing in stock trading is to protect the safety of principal!

Many people have made money but ended up losing money because they did not pay enough attention to the principal.

Only by preserving the principal can you make a profit. If the principal fluctuates too much, it may seem like you are making money. However, if you do it for a long time, there is a high possibility of losing money due to too much uncertainty.

Preserving principal is the basis for maintaining a good mentality. The mentality of not losing money and losing money are completely different.

Loss will make people irritable, frustrated, disappointed, and have negative emotions one after another. However, keeping the principal will bring more hope.

Keep your principal and you can easily start sailing again.

Those who finally make a profit attach great importance to their principal.

Dabao has a habit of doing stocks. Every time he makes too much profit, he will stop and take a break to stabilize his mentality. The process of stabilizing his mentality is also a process of converting profits into capital.

Because of the substantial profits, continuing to operate will produce two results, aggressive or conservative.

Radicalism is due to the desire to accelerate capital accumulation due to substantial profits.

This kind of aggressiveness often results in very large losses, because many times a large profit will be at the end of the market. If you continue to operate, it will easily lead to deep traps or continuous cuts, and the best way is to stop. It is okay to judge the direction and position of the market, adjust your mentality and stabilize it, wait for a mid-level correction, grab a rebound, and then make another wave of the market.

And this kind of rest is not a lack of operation. Stable stocks, stocks with good fundamentals that have not risen sharply, are all targets for rest. The profit retracement of decline is not large, but the profit will be considerable due to the superposition of the large profit ratio in the early stage, and there will be a compensatory rise at the end of most markets.

Once the final period of supplementary increase for a stock is established, operations can continue without supplementary increase, indicating that there will still be market conditions in the later period.

In this way, not only the principal but also the profits are preserved, and the profits may also be increased.

For those who are cautious in operating after making profits, it is easy to go short. Although many people recommend short positions, short positions are tantamount to losses in the big market.

There is absolutely no need to go short. If you can exchange a small loss for a large profit, remember that short position is irrational behavior.

Dabao will only adjust positions, control risks, and allow profit retracement through position adjustment and allocation, but will never allow the market to go short. If you wait for five years for a big market move and then miss it, if your mentality is unbalanced and you chase after it at a high level, isn't this asking for losses?

If you feel the risk is increasing, adjust to low-risk stocks. After the risk is released, the risk proportion is appropriately increased. It's enough to withstand the risk.

In 2015, due to reasonable adjustments and the use of some methods, even if there was a sharp decline, there were still good returns. And it's in a fully melted state.

If there is indeed no loss from the short position, there is no gain either.

The qualifications for new risk-free arbitrage are gradually lost, which is not cost-effective. It is easier to get trapped if a rebound occurs midway. Only by constantly adjusting position risks according to the market can profits be maximized and risks reduced.

Preserving principal does not necessarily require controlling positions, nor does it require short positions.

So how to judge the risk of individual stocks.

1. Learn to judge the risk levels of different stocks.

The risk of stocks that are accustomed to big rises and falls will not be small. They need to be avoided after a big rise. Stocks with little long-term fluctuations are suitable for risk aversion. In fact, it is very simple. These stocks can all be used. After making profits, you can use part of it to buy low-risk stocks with little room for decline.

The stock you sold fell by 30%. After stabilizing, you can exchange the stock if you only lose a few points by buying the stock. In fact, the profit of 20% is preserved. A few points or a dozen A retracement is allowed. Of course, it would be better if there is profit later. In fact, we have already made 30 or more.

However, these losses and profits do not need to be calculated, because if you operate this way for a long time, the profits and losses will offset each other, and the profit will not change too much.

2. Look at the increase. If the increase is too large, the demand for correction will be greater. There is actually huge room for decline after making a big profit or breaking out.

As for the long-term stable stocks that have not risen much, you can buy them and hold them, or you can trade them in the swings. If they rise too much, a sharp correction will release the risk before entering.

Five times or ten times increases, and a 50-fold correction are particularly common. In this down cycle, it is completely possible to operate low-priced stocks to achieve profits, and then gradually intervene to catch a reversal of the market.

However, many retail stock investors cannot double the market price after intervention, but they are exposed to the risk that it may drop by 50% at any time. If they learn to avoid risks, they will reduce this risk.

And Dabao often said that the stock market will not finish in one day, and it will give you enough time to adjust positions and exchange stocks. There is no need to sell all the stocks at once, and there is no need to exchange all the stocks at once. , proceed slowly, and avoid risks slowly. If it continues to rise sharply, the profit will be good. Continue to sell slowly and buy slowly. In the end, you will find that such slow trading not only avoids risks, but also is better than selling at one time. out to increase revenue.

We must pay attention to preserving principal and profits. When it is time to rest, find ways to take a rest and increase the possibility of profit, but do not operate aggressively or operate short positions.

Buffett’s teacher Graham actually made a relatively in-depth analysis of this issue.

If you are investing rather than speculating, you cannot stress enough the importance of protecting your capital.

Graham said something about this, and I hope all friends who invest in stocks will keep it in mind:

There are two important principles of investment: one is not to lose money; the other is not to lose money; Forget number one.

The principal is so important to everyone, so how can we keep the principal? You need to know whether you are investing or speculating

Graham's definition of investment is: Investment is an activity that, after in-depth analysis, can promise the safety of principal and provide satisfactory returns. Anything that fails to meet these requirements is speculation.

Therefore, stock trading is not necessarily speculation. Speculation usually involves buying stocks with the purpose of making quick money and gambling.

If it is for investment purposes, then you need to invest time in analyzing and researching the company behind the stock. In order to make the principal safer, you must also ensure that the purchase price has a certain margin of safety. The best price to buy is relatively cheap. If there is no such a good opportunity, then at least you cannot chase the high price. In this way, if you make a wrong judgment and the stock price falls in the short term, you will not necessarily lose money.

After all, investment will not be correct all the time, and the extreme sentiments of the short-term market can sometimes be very extreme, so make sure that the company you buy is a good company, and the price you buy is safe enough. Buy a company that you understand the value of.

Everyone has his or her own circle of competence, which means that everyone’s abilities have boundaries. Ability without boundaries cannot actually be considered a capability.

So no one can understand all companies.

If you want to understand a company, it is most important to have a deep understanding of the industry and related technologies. People in the industry usually know the relevant companies best and may have a very intuitive understanding of changes in companies within the entire industry.

Secondly, you must clearly understand a company's business situation. Each company's operating conditions, management capabilities, market competitiveness, etc. are different. Different companies need different analyzes to have a deep understanding of a company.

Finally, you must have the ability to read company annual reports. The prospectus is actually the most detailed information, followed by the annual report and periodic reports. If you can understand these information, you can not just look at the superficial financial indicators, but also analyze whether the values ??of the financial indicators are appropriate, such as net profit margin. At least analyze whether there are non-recurring gains and losses, whether there are artificially inflated profits, whether there are high profits but poor cash flow, etc.

Only by understanding the true core value of a company, being able to estimate its future development, buying it at a more reasonable price, and making long-term investments on this basis can we basically guarantee the principal. Make money on a safe basis.

The stock god Warren Buffett has a very famous saying: "The three most important points in investing are: first, keep the principal, second, keep the principal, and third, remember the first two points." In the stock market, a gentleman cannot stand. Under the dangerous wall, the first principle is risk control. If you want to make money, save your life first.

Principles of preserving principal:

1. Stop loss comes first. You must not only know how to stop loss, but also integrate knowledge and action. After buying a stock, you must set a good stop loss point. , if it falls below, you must resolutely implement it, take chances, and hesitation will only make the situation worse;

2. Do not trade excessively, and make reasonable arrangements for investing in the stock market without affecting your family life. You must not misappropriate your children’s schooling money, your parents’ pension money, medical money, or even money to buy a house. Do not use financing, borrow money, or borrow money from usury;

3. Never do it. When trading against the trend, if the general trend is not good, you should let the funds rest; if the market is good, you should let the profits run hard;

4. After making a profit, you should set aside part of the profit for family life. Don’t have the idea of ??compounding profits;

5. The number of stocks you hold cannot be too many. You can operate up to 3 stocks within 500,000, which can reduce your operational errors;

In In the stock market, if you can keep your principal, you have already defeated 90% of people. Over time, you will definitely become one of the few people who make profits in the stock market.

The most important thing in stock trading is to protect the principal. This sentence is correct, but in actual operation, the key is what method people choose to protect the principal.

As long as this topic is discussed, many experts will jump out and say that the way to protect the principal is to cut the flesh and stop the loss. If you cannot cut the flesh and stop the loss, it proves that you are not a qualified trader. Almost all foreign technical textbooks tell you: stop losses resolutely.

I don’t want to argue here, I just want to say that after you listened to these principles, you followed it and you cut off losses frequently, but did your profits really run away?

After you listened to the master’s teachings, you started to take technical stop losses. If the stock price breaks through, I’ll take the cut; if it’s 10 below the buying price, I’ll take the cut; if the market breaks through, I’ll take the cut.

If you cut it back and forth like this, at the end of the year, you will see that there is not much principal left.

Any stock bought at any price will theoretically have a 30-50 downside.

If you use technical stop loss, you will find that no matter what kind of stock you buy, you will end up with a stop loss. There is no perfect stock in the market.

The disadvantage of using technical stop loss is that it encourages you to continuously exchange stocks. This is contrary to the "exclusive" principle of holding shares in the market and is the biggest cause of investment failure.

If you don’t care about your frequent stop losses, or are even proud of it, it means that you have learned bad investment habits. I never use technical stop loss, I only use logical stop loss.

If I am trapped after buying a stock, as long as the logic before buying is still there, as long as it is still in the bottom range, and as long as its fundamentals have not significantly deteriorated, I will not stop. If there is a loss, I will increase the position to buy. There is a logic here that the market has no obligation to let you buy at the lowest point, and the market has no obligation to let you buy when it goes up.

If you find that the logic behind your purchase no longer exists and the fundamentals of the stock have seriously deteriorated, then I will stop the loss without hesitation, even if I am trapped by 50.

This requires you to be cautious before buying stocks, consider all the market situations thoroughly, choose the best stocks after comparing multiple parties, and find the low point of the market and individual stock declines. Get started and buy.

Hello everyone, I am the president, a trader of an asset management company who focuses on sharing 16 years of stock investment experience. Today, let us answer your questions in simple terms.

In any industry, as long as the values ????are wrong, the final results will be different. In the stock market, for retail investors, profit is the main focus, which is like a battlefield. There is no defense, only offense. Although it is said that the brave will win when faced with a narrow road, you must also weigh your own weight. The current situation of retail stock trading

As of now, most of the 170 million retail investors in my country are contributors and have stepped into the stock market with 70% dreams and 30% confidence.

Some of them plan to realize their ambitions in the stock market, some plan to change their lives in the stock market, and some plan to achieve wealth and freedom in life through stock investment and financial management, but the ultimate goal is to make other people's money. .

During the recent exchange between investors and the president, they said a very classic saying, that is, if you don’t make money in stock market investment, others will definitely make money.

Due to the different understanding of the stock market by retail investors, different retail investors will make profits and losses in the same time period, and the same will be true for the same retail investors in different time periods.

In the process of stock investment, the president also has 16 years of stock investment experience. Learning the knowledge of stock investment is the only way to make profits in stocks.

Maybe some people are lucky and can make money as soon as they enter the stock market, but no matter how good your luck is, it cannot stay with you for a lifetime. Rich knowledge and experience are the key to staying with you for a lifetime.

At the same time, the market believes that it is impossible for an investor to lose money regularly in the stock market. This does not conform to the logic of stock investment. It may be due to mentality or various other reasons that cause short-term losses. Why stock trading must first preserve the principal

For most retail investors, entering the stock market is to make money, but they forget that stock trading needs to be carried out step by step. Preserving the principal is the first step in stock trading.

So we see many uncles and aunts going to banks to buy investment and financial products, or going to asset management companies to buy related financial products. The main thing they want to inquire about is whether they are capital-guaranteed financial products.

I still remember Luo Yonghao of Smartisan Technology once said that we sell mobile phones just to make friends, and by the way, we make money in the process of making friends.

This means that we invest in stocks to learn the knowledge of investment and financial management, and make money while learning.

Many retail investors don’t understand why they must first protect their principal when investing in stocks. Here, the president gives a simple example to illustrate the importance of this matter.

For example, if you have 1 million to speculate in stocks, you will definitely have no worries as long as you make money. If you lose 500,000 under the premise that the general environment is not good, then your principal Only 500,000 are left.

At this time, if you want to make 1 million with 500,000, you actually have to double it to achieve it. This is the same situation as when you initially took 1 million and wanted to make 2 million.

But in fact, according to your investment situation, your loss is only 500,000, which is 50 of the original principal, which invisibly forms a multiple relationship with the proportion of your profit.

If it is difficult for you to earn 500,000 from 1 million, let alone another 500,000 from 500,000, this illustrates the importance of preserving principal in stock trading.

Taken together: Our ultimate goal in entering the stock market is definitely to make money. No one wants to be a wedding dress for others in the stock market, and in this process we need to understand and learn to improve our own knowledge. scope.

Making money in stock investment is like us going up a mountain, and losing money is like us going down a mountain. Which one is easier? I believe everyone can know it at a glance, so preserving the principal is the first and most important step in investing in stocks. step.

I won’t talk about the importance of principal, but I will talk about how ordinary investors can keep their principal: 1. Get rid of the retail investor mentality. As an ordinary investor, it is common practice to fill up positions at every turn, frequently exchange shares, and chase the rise and kill the fall. But the result is often that when you sell, it goes up, and when you buy, it goes down, and you get slapped on both ends. The above is a typical retail investor's thinking. The investment behavior governed by this kind of thinking just falls into the trap laid out by the main force. The main technique that the main force is best at is to pick up chips at low prices when retail investors are fearful, and to sell aggressively when retail investors are chasing the rise crazily. 2. Allocate positions reasonably. It’s a cliché, don’t put all your eggs in one basket. If you have a capital of 100,000, you can reasonably allocate stocks in different sectors according to 5:3:2. This can refer to the fund's position allocation plan. 3. Obey the market trend. The obedience here is absolute obedience. In the investment market, the trend is an iron discipline. The trend is upward, hold firmly. The trend is downward, resolutely go short. Many people lose money because they don't follow the trend and think they are right. I can tell you what you think is worthless.