Lightyear FX: Financial Analyst, Financial Media Person, Amateur Research Trading Technical Analysis. Stay on top of the latest cutting-edge technology information and share the most in-depth industry insights with you. The following content is from Just2Trade.
1. Selection strategy for 11 types of stocks
1. Stocks with excellent stock performance
Since stock characteristics are formed over a long period of time, it takes time and effort to understand the characteristics of each stock, collect information, analyze data, and predict the trend of individual stocks. When shareholders have a comprehensive understanding of the characteristics of individual stocks, it is easier to recognize the changes in the personality of stocks. When choosing stocks, you should first consider the market attributes of individual stocks, and it is best not to touch weak stocks that lag behind the general trend stocks, and give priority to popular index stocks.
2. Stocks with high volatility
1) Stable earnings and income
A company's stable earnings or an imminent turnaround is a sign of good fundamentals, which will eventually be reflected in the rise in stock prices.
2) The industry has high access standards
Due to the high access standards, the company is irreplaceable and often becomes the subject of hype.
3) The market potential is large
Some companies are not fully expanding in the current market, but the market prospects for their products or services are very broad, and if the company is operating normally, sooner or later the stock price will rise. However, low prices are not necessarily good, if the listed company loses too much, the possibility of turning losses into profits is not too large, and it is better not to buy such penny stocks.
3. Shares of newly listed companies
1) Focus on company fundamentals
If the industry to which the company belongs is a sunrise industry, especially some sunrise industries with full imagination, its shares will be priced higher, and it is easy to obtain greater upside. And the stronger the majority shareholder, the more likely the listed company is to receive more support. The investment direction of the raised funds can help shareholders judge the future and growth of the company, and investors should understand the relevant matters according to the prospectus to judge the future development prospects of the company.
2) Analyze whether the IPO listing pricing is reasonable
Listing pricing is greatly affected by the market and sector hotspots, and if the market continues to rise and the stock is a sector hotspot, its pricing is relatively high. In addition, the price of other new stocks will also rise if they are speculated and won before listing. If the stock price of other new shares mostly opens high and moves low before listing, then its listing price will be lower. If the new stock has good highlights, then it is possible to get a lot of hype.
3) Pay attention to the turnover rate on the first day after listing
This is the key to the future stock price trend, judging whether the new stock has short-term opportunities, the most important point is whether the turnover is sufficient, if the first day of change of hands is close to 60%, the main funds of speculation have crazy pull up the stock price, so that the price out of the cost area of the possibility.
4. Stocks in strong industries
Clarify which industries are strong industries in the current economic cycle, which are sunset industries, and which are listed companies supported by national industrial policies. It is also necessary to refer to the trend of industrial development in the world, pay attention to the economic dynamics at home and abroad, and cultivate a sense of future prospects. Investors need to have a long-term vision for promising cutting-edge industries, especially those with high technology and high added value.
5. Choose cheap "real stocks"
A general rule of thumb is that if the stock has no growth potential, no matter how cheap it is, it has no value to buy. Secondly, determine the price below the net asset value of each stock, if the current stock net asset value ratio is more than the previous year, it means that the price has an upward trend, and then comprehensively consider the highest price, lowest price and net earnings per share in each year in the last 5 years to calculate the highest P/E ratio and the lowest P/E ratio, and determine whether the current high P/E ratio or low P/E ratio is on an upward trend compared with the previous one.
6. Choose growth stocks
1) The company is in a growth industry, and the company is an excellent growth enterprise in the industry. Growth industries generally include biochemical engineering, space and marine industries, electronic automation and instrumentation, and industries related to improving living standards.
2) The company's product development capabilities, market share and product sales growth rate are higher than those of similar enterprises, and the demand for the company's products is growing.
3) The company's labor costs are low, and labor costs will not be a hindrance to the company's growth.
4) The company can control the source and price of the required raw materials, and will not weaken its competitiveness due to rising prices, and always maintain a profitable trend.
5) The company can reinvest a large percentage of profits instead of distributing dividends to shareholders to promote the company's sustainable development.
6) The growth of earnings per share has kept pace with the company's growth and maintained a high level of growth.
7. Choose speculative stocks
1) Choose the company's shares with both advantages and disadvantages
The stock price of such companies is prone to skyrocketing when their strengths are exaggerated, and their stock prices are prone to plummeting when their weaknesses are widely disseminated.
2) Choose stocks with a small amount of capital
Stocks with less capital require less capital to speculate, and once the main institution intervenes, the stock price will fluctuate significantly, and investors can make considerable profits in this large fluctuation.
3) Select the newly listed stock
IPOs are susceptible to manipulation by speculators, causing large fluctuations in stock prices, and investors can capture profit opportunities.
4) Select the theme stock
When the main institutions operate on stocks with acquisition themes, allotment of shares, dividends, performance themes, etc., shareholders can take the opportunity to make profits. General investors should be cautious about speculative stocks and do not blindly follow the trend, so as not to be trapped at a high level and become a victim of large investors.
8. Choose popular stocks
1) Pay attention to the cycle of the economic cycle
When the economy is in a recession, the profitability of all kinds of companies generally weakens, but consumption does not stop, so the consumer sector is relatively good, and hot stocks may appear in the consumer sector, and in the economic recovery phase, people are competing to expand the scale of production, and the situation of production enterprises is relatively good, so hot stocks may appear in the production sector.
2) Grasp the investor mentality
If investors are worried about deflation, this worry will quickly be reflected in their own investment behavior, which in turn will affect the stock price, and if you can keenly grasp the thoughts of investors and understand what they care about or worry about, then it is not difficult to judge and choose popular stocks.
3) Conduct technical analysis frequently
After selecting popular stocks, technical analysis should be conducted to verify whether the judgment is correct, such as whether the results of technical analysis such as K-line charts and indicators are more upward, and what is the state of support and resistance. Popular stocks rise and fall as fast as they come, and their prices are often detached from the company's performance. Therefore, you should be cautious when choosing to buy such stocks, and it is best not to buy too much, let alone buy all of them.
9. Choose large-cap stocks
1) Focus on historical price levels
Large-cap stocks have strong support and resistance at the lowest and highest prices in the past, and investors should use them as an important reference when buying and selling stocks.
2) Pay attention to interest rate movements
When investors estimate that interest rates will rise in the short term, they should sell stocks and wait for interest rates to rise before making up for them, and when they expect interest rates to decrease in the short term, they should buy stocks and sell them when interest rates are really lower.
3) Pay attention to the degree of economic prosperity
Investors should buy stocks at low prices in the later stages of the economic downturn, and sell them when the performance is significantly better and the stock price rises sharply.
10. Choose small and mid-cap stocks
Since small and mid-cap stocks are easy to be manipulated by large investors, investors should not blindly follow the trend when buying and selling, learn to study and judge on their own, and do not listen to unconfirmed rumors. After buying a stock at a low price-to-earnings ratio, don't follow the trend and sell the stock, learn to wait patiently for the stock price to come out of the trough. When the stock reaches the high-price area, don't be greedy, and take it when you see it.
11. Use the Bollinger Bands indicator for stock picking
1) The Bollinger Bands are composed of the upper rail, the middle rail, and the lower rail to form a ribbon channel, between the upper and middle rails are strong areas, and between the middle and lower rails are weak areas, and the stock price runs between the upper and middle rails most of the time, indicating that the stock price is running in a strong area, and the stock price is expected to continue to rise, and investors in this kind of stock can consider intervening.
2) When the price runs in the area between the middle and upper bands of the Bollinger Bands, as long as it does not fall below the middle band, it means that the market is in a bullish market and can buy on dips.
3) The opening of the Bollinger Bands indicator gradually decreases, which means that the rise and fall of the stock price gradually decreases, and the strength of the long and short sides tends to be consistent, and the stock price will choose the direction to break through, and the smaller the opening, the greater the strength of the stock price breakthrough.
4) Breaking the middle track, indicating that it is a short market, the trading strategy is to sell on the high, do not consider buying; when the market price runs along the upper rail of the Bollinger Bands, it means that the market is a unilateral rising market, and the long single held should be held, as long as the price does not leave the upper rail area, it should be patiently held; when running along the lower track, it means that the market is currently a unilateral downward market, generally a wave of rapid decline market, you should hold the currency and wait and see, as long as the price does not leave the lower rail area, you can wait patiently.
5) After selecting the stocks with a small opening of the Bollinger Bands indicator, if these stocks have the following conditions at the same time: a. The fundamentals of the listed company should be good, so that when the main force pulls up, it can attract a large number of followers; b. On the K-line chart, the stock price is best to stand on the 250-day, 120-day, 60-day, 30-day and 10-day moving averages; c. To see the position of the current stock price, it is best to choose stocks with stock prices at the relatively bottom, and be more careful with those stocks that are sideways at a high level, rising and falling. Then, the probability of an upward breakout of these stocks is greater.
6) Use the Bollinger Bands indicator to select stocks, and the closing and opening of the Bollinger Bands are very critical. Once the upper and lower bands of the Bollinger Bands are very close together, it often indicates that the operation of the stock price will change. The position of the opening and closing of the Bollinger Bands determines that investors will be faced with making major decisions to buy, hold, and sell.
7) Use the Bollinger Bands indicator to select stocks, and be sure to observe the Bollinger Bands and the Bollinger Bands necking state. The price fluctuates near the middle track, and the upper and lower rails gradually shrink, which is the harbinger of the coming of the big market, and should wait and see the short position, waiting for the opportunity; the sudden expansion state after the channel shrinkage, which means the advent of a wave of explosive market, after which the market is likely to go unilateral, you can actively adjust the position, and follow the trend; when the Bollinger Bands shrink, before a wave of big market comes, there will often be a false breakthrough market, which is the trap of the main force, and should be vigilant, and can be resolved by adjusting the position.
8) The characteristics of opening expansion, when the stock price quickly breaks through the suppression of the upper band of BOLL, it means that the time for ultra-short-term buying is coming. At the same time, we should also pay attention to the opening expansion strength of the 5-minute BOLL, the greater the opening expansion strength, the stronger the main force pull, and the greater the short-term upward strength. If the opening expansion is not strong, it often implies that the rise is more limited, and it is also necessary to pay attention to whether the trading volume is rapidly enlarged when the opening expansion of BOLL occurs in 5 minutes, and the individual stocks with abundant volume can rise strongly.
9) The time period of the Bollinger Bands should be based on the weekly line, in the unilateral market, the position has a high profit, in order to prevent a large pullback, you can refer to the principle of the daily Bollinger Bands.