Are you wondering how you can win stock investment?
Everyone once wonders what kind of stocks to look for and what kind of trading method should be used to lead to results.
If you work on stock investment after knowing the tips of stock selection and trading methods like this, and if you work on stock investment without knowing the tips, the winning percentage will change significantly.
However, even if you hear this story, if you do not understand the knack of stock investment, you will not be able to grasp the knack.
Therefore, on this page, I have summarized the tips for the manager of a self-proclaimed “stubborn investor” who has been investing in stocks for 6 years to produce results in stock investment .
Table of contents
- 1 Tips for stable earning through stock investment
- 2 Points for finding a brand
- 2.1 Financial soundness of the issuer of shares
- 2.2 Promising for the future of the company
- 2.3 The current price is at a bargain level
- 3 How to choose the sale timing
- 3.1 Unrealized gains / losses are not final gains / losses
- 3.2 Ingenuity not to make a mistake in the profit value
- 3.3 How to determine the stop-loss line
- 4 Points of chart analysis
- 4.1 Checking the direction of the wave in the market
- 4.2 Near high or low
- 4.3 Compare with past stock prices
- 5 Summary of tips for earning by investing in stocks
Tips for stable earning through stock investment
The key to making a profit on a stock investment is to know exactly what you need to meet to succeed in a stock investment.
The main condition for the success of this stock investment is actually very simple , just sell the stock you bought at a timing higher than the bid price .
Considering such a simple structure, if you do these two things in stock investment, you will naturally make a profit .
- Find a stock whose stock price goes up
- Sell at the right time
I will introduce the methods (knacks) for successfully performing the “stock search”, “chart analysis”, and “sale strategy” mentioned here by investing in stocks.
Points for finding a brand
In order to realize the victory of stock investment, which is to “search for stocks that can be expected to make a profit and let go when the stock price rises.
The key to selecting this stock is to find a Japanese stock that meets these three points .
- The financial health of the issuer of the shares
- Expectations for the future of the company
- The current price is at a bargain level
We will look at the details of each in the future.
The financial health of the issuer of the shares
As long as a company has a lifespan like a human being, the company that is now said to be safe may go bankrupt in the medium to long term.
This bankruptcy timing is a world known only to God, but the high risk of bankruptcy can be judged with some accuracy from the financial situation .
For example, corporate stocks with a capital adequacy ratio of less than 30%, current assets more than current liabilities, and decreased sales and profits can be judged as dangerous stocks.
If you invest in the stocks of these companies, there is a risk that all the investment funds will disappear, so it is a stock that you should avoid when investing in stocks.
Expectations for the future of the company
Whether it is a short-term stock investment or a long-term stock investment, the outcome of a stock investment is determined by the transition of the stock price after the purchase of the stock.
Given this premise, the key to success in stock investment stock selection is to analyze the future potential in addition to the financial analysis of the company . In particular, it is important to check the external environment and laws and regulations surrounding the company.
By doing these, you can judge whether or not the stock will attract the attention of other investors in the future. On the other hand, it means that you can naturally decide whether or not the stock should be bought by investing in stocks.
The current price is at a bargain level
The third key to selecting a stock is an analysis of the current stock price.
As long as the condition for generating profits on stock investment is “sell the stocks you own at a timing higher than the bid price”, working on stock investment with clearly expensive stocks is directly linked to “defeat”.
Then, what to do is to search for cheap stocks based on PER, dividend rate, etc. , and work on stock investment with those stocks . If you can do this well, the winning percentage of equity investment will naturally increase.
How to choose the sale timing
As with stock selection, the timing of sale is essential to the success of stock investment.
The reason why the timing of sale is important in stock investment is that the result of stock investment is determined “when it is sold” .
Unrealized gains / losses are not final gains / losses
This is not well known, but even if the stock price of the purchased stock rises 1.5 times, the profit will not be confirmed unless it is released.
This is because profits in the state of stocks are nothing more than “unrealized gains” as long as they are not cashed. By the way, this story is the same when a loss occurs.
In fact, if the stock price of the stock you hold drops by 5% but you do not sell it, it is just an unrealized loss.
Considering this point, the key to considering the timing of selling a stock in stock investment can be said to be the setting of a price that determines profit and a price that cuts loss .
These are generally referred to as loss cut prices and profit profit prices, and the appropriate setting of these prices determines the outcome of stock investment. I will introduce the tips for setting the loss cut price and the profit price.
Ingenuity not to make a mistake in the profit value
The trick to not mistaking this profit line is not to be swayed by market movements.
What this means is that 90% of equity investors will either make a profit as soon as the stock price of the stock they buy rises, or will continue to hold it.
If you do this, even if the price of the stock goes up, you will get only a small profit, or you will not sell at the best selling time.
The trick to avoiding this is to decide on a fixed profit price first . If you do this, you can sell the stock at your own rhythm, not at the market movement.
By the way, this is based on the experience of the manager, but 5% for medium-term stock investment assuming a holding period of about 2 weeks.
And in the case of long-term stock investment, which assumes that the stock holding period is 3 months or more, 10% is a good timing for profitability.
How to decide the stop-loss line
Next, I would like to introduce some tips for thinking about the stop-loss line in stock investment.
The key to a good stop-loss line is to first determine the maximum amount of loss you can tolerate .
In fact, one of the wasteful acts that beginners of stock investment and intermediates who cannot produce results often do is “unacceptable loss”.
This “loss cannot be tolerated” means that if any loss occurs in a stock investment, the loss will be cut off immediately.
This behavior is not wrong at first glance, but if you sell your stock immediately with a small loss, you will not be able to win the stock investment forever.
However, if you tolerate too much loss in equity investment, it will be difficult, so you need to balance it.
When considering this balance, it is important to work on equity investment with the stance of ” determining the maximum amount of loss that can be tolerated and refraining from stopping loss until that point.”
By the way, it is up to each investor to decide where to put this loss tolerance line, but from the manager’s 6 years of stock investment experience, 5% to 8% is realistic.
If it is higher than this, the loss at the time of loss cut will be large, and if it is lower than this, it will be sold immediately, making it difficult to hold the stock for a long time.
Chart analysis points
Chart analysis is important when considering the “Tips for searching for stocks” and “Tips for selecting selling timing” introduced so far.
The reason why this chart analysis is important is whether the target issue is a “sell issue” or a “buy issue” when looking at the chart. And you can decide when it is appropriate to buy it.
The key to effective chart analysis with such attractiveness is to focus on these three points .
- Confirmation of market wave direction
- Find out if it is high or low
- Compare with past stock prices
I will briefly explain the contents of each.
Confirmation of market wave direction
The first thing to check is whether the stock price wave is generally up or down.
If it is upward, it is a noteworthy stock whose stock price is rising. On the other hand, if it is downward, sales are increasing and it can be seen that it is a bad stock that investors are avoiding.
You can find out the direction of this stock price wave by looking at the wave of the chart for the last month or so, so we recommend that you do this first.
Is it near the high price or the bottom price?
If you want to win by investing in stocks, it is essential to analyze whether the current stock price is close to the bottom price or the highest price among the latest stock prices.
The reason why this is important is that stocks that are close to the highest price are inundated with sales and there is a risk that the stock price will plummet. On the other hand, in the case of the bottom price, if the stock is attractive, it will be flooded with buying, so a sharp rise can be expected.
Naturally, the price close to the “highest price” of the former is a chance to sell , and the timing close to the “bottom price” of the latter is a chance to buy .
If you mistake these two things and buy at the timing of the high price or sell at the timing of the bottom price, it will lead to the failure of stock investment.
Compare with past stock prices
The third chart analysis tip is to see how far the current stock price is from the average of past stock prices .
This makes the chart analysis period as long as 3 or 5 years, and confirms the difference between the current stock price and the stock price 3 or 5 years ago.
If you do this, you can see whether the current price of the stock you are aiming for is “high or low” from the past standard price.
Moreover, if you lengthen the chart analysis period and check the stock price fluctuations over a long period of time, you can also see whether the stock you are aiming for is a stock with high price volatility.
Summary of tips for earning by investing in stocks
So far, this page has featured tips for making a profit from stock investment.
It may be a different story, but here are three tips for making a profit from the stock investment mentioned here.
- Find cheap and safe growth stocks
- Determine an appropriate sale price
- Analyze the current situation from the chart
If you practice the three tips mentioned here properly by investing in stocks, you will reduce the risk of making a mistake in selecting a stock or setting a selling price.
In other words, the winning percentage of stock investment will naturally increase significantly.
By the way, all three tips mentioned this time are important, but the most important thing to get results in stock investment is to “determine an appropriate selling price” .
If you don’t make a mistake in setting this selling price, you’re less likely to make a big loss on your equity investment.
Considering this point, if you want to make a profit by investing in stocks, you should aim for safe trading while paying attention to the selling price.