Recently, many people have left messages and want to share their trading strategies about ETFs.
Nowadays, there are indeed many more people who recognize ETFs than before.
But investing in ETFs, how to operate and make money, that is, confused.
The essence of the problem is that I am confused about the concept of ETF investment and do not understand the difference between ETF and stocks.
ETFs can be a mindless investment or a sophisticated trading investment.
Perhaps many people do not agree and think that brainless investment will not lead to results, but ETFs themselves do.
We want to separate ETFs from the bottom, which are divided into two major types, and the two investment methods are completely different.
The first is a broad-based index.
The so-called broad base can be done for brainless valuation fixed investment, and it is very simple to set up take-profit and stop-loss, without thinking too much.
Broad-based refers to large indices, indices that do not have an absolute style, and are not biased towards sectors.
For example, SSE Index ETF, CSI 300 ETF, CSI 500 ETF, CSI 1000 ETF, ChiNext ETF and so on.
Broad-based means that the corresponding index contains relatively broad investment targets.
This broadness refers to the stocks included in the bottom of the index, which are not of the same type, and there are many types.
Of course, different broad bases correspond to different styles.
For example, the SSE 50, CSI A50, and CSI 300 are more biased towards weighting.
For example, the GEM, the 50 and 100 are more inclined to the direction of science and technology.
For example, CSI 1000 and CSI 2000 are more small and medium-cap stocks.
The investment direction corresponding to the broad-based index is actually different, and the style is also obviously different.
However, there is no absolute industry in broad-based indices, which can avoid the impact of industry trends on the index.
This means that broad-based indices can be measured by valuation.
Because the ups and downs of the industry have a great impact on valuation changes.
Rising industries have a higher valuation premium, while declining industries will have significantly lower valuations.
Therefore, broad-based can use the valuation method to arbitrage, while industry funds are difficult to arbitrage.
For example, the Shanghai Composite Index ETF should be the easiest ETF index to trade.
The more it falls, the more it buys, the more it rises, the more it sells, and simply doing grid trading can make money by arbitrage.
It's just that many retail investors don't have the patience to do index trading, but lose money in random choices and operations.
If you don't have any concept of ETF investment, give preference to broad-based as the target for entry.
The second type is the industry index.
The sector index itself has been mentioned and cannot be traded according to the valuation method.
Because in rising industries, there is often a valuation bubble, or room for speculation.
Once it goes downhill, the index will shrink significantly, making investors lose money.
What we are most familiar with is actually the China Internet ETF, which has suffered a lot of ups and downs for many professional investors.
This LOF index fund has risen about 6 times cumulatively from 2015 to 2021.
However, in 2021, under the cold winter of the Internet and the policy restrictions of the US stock market, the largest decline exceeded 75%, leaving only 1/4.
Investors have suffered heavy losses, so to speak, blood losses.
Although there is no blood and no return, it is basically a luxury to buy at a high point and want to return to the capital.
This fully shows that the investment of industry index ETFs, once at the wrong time, chooses the wrong industry, will encounter irreversible risks.
It's not like a broad-based index, where you can slowly smooth out the risk by covering your position in the low valuation range.
Once the industry undergoes irreversible changes, it will not go up if it falls.
Therefore, the selection of industry index ETFs essentially requires investors to have the ability to analyze industry trends.
If you don't know much about the industry and don't understand whether the current position of the index is reasonable, try not to touch the industry index ETF.
Most people choose industry index ETFs at a high level, whether it is liquor, medicine, chips, or new energy, they have already harvested batches of leeks.
As a small scatter, first figure out the types of ETFs, and then consider how to trade operations, don't think that ETFs are as simple as selling high and buying low.
This kind of idea is actually the same as retail investors entering the market to speculate in stocks, and the concept is not yet there, and they are eager to make money.
The operating logic of ETFs is not much different from stocks.
There are a few main differences, and I will repeat them to you.
1. Stocks have performance, but ETFs have no performance.
This shows that there is no thunderstorm situation in ETFs, only good or bad industry trends.
The worst case for individual stocks is to be delisted, and the worst case for ETFs is to fall sharply, cut in half, and cut off their knees.
ETFs are less risky than individual stocks.
2. Stocks can be ultra-short-term, but ETFs are difficult.
The volatility of ETFs is obviously smaller than that of the index, which makes it very difficult for ETFs to do short-term.
It is easy for individual stocks to appear as a leader and a demon stock to double, or even 3-5 times, in just a few weeks.
However, it is very difficult for an industry's index to rise by more than 30% in the short term.
Therefore, the operation style of ETFs is either long-term or swing, and there are few fast-in and fast-out.
3. ETF position control can ensure that you can make money, but stocks cannot.
It is because the ETF corresponds to the index, and there is no risk of delisting in the index, so the ETF can turn over and make money through position control.
ETFs rarely lose more and more, unless they are bought at a high point and then fall all the way down.
However, as long as the amount of funds is large enough and the margin replenishment funds are enough, it is basically a certainty to make money back to capital.
Of course, smart investors won't go on a swing at the high levels, at least until valuations return to a reasonable range.
The so-called buying point of ETF mainly refers to the two dimensions of valuation and trend.
Valuation is easier to understand, that is, historically, whether it is broad-based or industry index, the corresponding valuation percentile.
The percentile is below 30%, which is a relatively safe range.
If you invest in ETFs in this range, you will only lose time, you will not lose money, and sooner or later you will return to your capital and make money.
If you enter the market at a high level and cannot make up your position at a low level, you may need to wait for a long time.
The other is the buying point of the trend dimension, that is, when the index begins to rise, and there is obvious intervention of funds, you can buy a little more.
This is similar to technical analysis in the stock market.
For retail investors who don't know much about trading, it is best to give priority to the valuation dimension as a buying point.
There are usually two ways to choose a selling point, one is to choose valuation, and the other is to choose a trend.
It is also recommended that retail investors, when they cannot accurately grasp the trend, choose a selling point according to the level of valuation.
Whenever the valuation enters the bubble zone, that is, the 70% percentile or more, don't hesitate and be greedy, and go straight to the pocket.
What you earn is yours, what you can't earn is empty talk, and taking the elevator is a very stupid thing.
ETF investment itself, the trading cycle will be slightly longer than stocks, investment patience, position allocation, investment strategy, it seems to be simpler, but in fact, it is more of a test of the comprehensive ability of investors.