Frequent Stock Switching: Key Cause of Retail Investor Losses

The primary reason retail investors incur losses is due to "frequent stock switching." Holding onto a stock for the long term and strategically trading it is, in fact, the best method for stock trading!

In foreign markets, the trading method is T+0, meaning that stocks can be bought and sold on the same day. However, the A-share market adopts a T+1 trading method, requiring stocks purchased today to be sold the following day. Therefore, what we often refer to as "doing T" in stocks generally means: based on having a core position, executing intraday operations by first buying low then selling high, or alternatively selling high and buying low.

The advantage of "doing T" in stocks is that it allows investors to capitalize on daily price fluctuations to achieve excess returns. While a stock may only fluctuate by 5 points in a day, one can achieve a 10-point profit through tactical trading.

Since A-shares are not T+0, performing "doing T" requires sufficient capital. However, retail investors often operate with limited funds, so it's advisable not to invest all available capital at once—keeping a portion in cash can help practice the skills needed for "doing T."

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I have been trading stocks for 17 years. By repetitively engaging in intraday trading with a single stock, I transformed an initial capital of 300,000 into over 40 million. I can confidently say that I have tried about 80% of the strategies in the market. Today, I will share the most practical "doing T" methods that have consistently proven effective in practice.

A trending stock can yield profits as high as 300% through "doing T"! Without further ado, let’s dive straight into the details—read patiently, and I believe you will gain valuable insights!

T+0 Short-term Strategies:

The T+0 model is designed to maximize the utilization of funds while minimizing costs.

T+0 operational techniques can be categorized based on the direction of trading as either forward T+0 or reverse T+0. Additionally, based on whether the strategy is for locking in profits or recovering from losses, we can further divide T+0 operations into recovery T+0 and profit-adding T+0.

Forward T+0 involves buying on the first day and selling on the next. It is suitable for stocks that are trending upward or maintaining certain angles during wave-like movements. The primary goal is to maximize profit; a 20% increase in stock value could be transformed into over 30%. This technique rests on the foundation of long-term analysis and short-term execution. Conversely, downward T+0 entails the cycle of selling first then buying back again. This approach is mainly used for recovering losses.

Intraday Trading Techniques:

1. Buy when the price crosses above the moving average.

If the real-time price has been suppressed below the average price line and suddenly crosses above it, this can be seen as a bullish signal.

2. Sell when the price drops below the average price line.

If the stock price rises shortly after opening but then turns downwards and breaks below the average price line, it indicates that the post-opening rise was a trap for buyers. A drop below this line is seen as a bearish signal.

3. Buy on moving average support.

Whenever the stock price pulls back near the average price line, it often rebounds, indicating effective support at the average price line, which is seen as a bullish signal.

4. Sell on moving average resistance.

Whenever the stock price approaches the average price line after a rebound, it tends to be forcefully pushed down, suggesting that the average price line acts as resistance, thus forming a bearish signal.

5. Sell when there's a peak followed by a downturn.

If the stock price is operating above the average price line and surges, but then fails to maintain momentum and turns downwards, crossing below the average price line, the strategy is to sell.

6. Buy when there's a downward turn.

If the stock price remains below the average price line for an extended period, coupled with a rapid decline, a reversal upwards indicates a good buying opportunity.

7. Buy on platform breakthroughs.

If the stock is trading above the average price line and repeatedly breaks through a platform, this indicates a positive bullish signal.

8. Sell on platform breakdowns.

If the stock is trading below the average price line and repeatedly breaks down through a platform, this indicates a bearish signal.

A beautiful female investor from Changsha impressed me with her trading methods. Her current stock portfolio is valued at nearly 3 million, compared to less than 500,000 at the end of last year. The key is that she has little understanding of the stock fundamentals and perhaps just an entry-level grasp of technical analysis. In just over six months, her impressive returns come from memorizing a few specific intraday patterns—if they match, she invests; if not, she stays away!

This young woman runs a clothing store in Changsha, trapped in the store for years with declining performance. She frequently overheard customers discussing stocks, which piqued her curiosity, prompting her to open a trading account. With abundant free time, she started to listen to different stock analyses and financial news. Initially, she didn’t understand much and incurred some losses, but instead of giving up, she continually learned and summarized her knowledge. She has become one of the most outstanding female investors I know in the stock market.

Her thinking is meticulous; she writes down every loss in a notebook. After two years of honing her skills, she has gained significant experience. Now several of her neighboring clothing store owners join her in discussing stocks. As they say, perseverance pays off. When she learned that I am a seasoned expert in this field, we hit it off immediately. After an in-depth conversation, I discovered her seemingly simple yet astonishing approach to trading. Over the past few days, I have carefully summarized her unique insights and hope to share them with others who might find them helpful!

1. If the stock price operates below the intraday moving average for an extended period and then suddenly has volume increase by more than ten times, followed by a swift upward surge, it is a strong bullish signal.

2. If the stock is in a continuous downtrend, with many attempts by buyers to reverse the trend but ultimately failing, and then it halts at a low price range and shows a box-like consolidation pattern, a sudden increase in volume followed by a rapid ascent is a bullish sign.

3. If the stock price consistently hovers above the moving average with gradual volume increases and every dip to the moving average is met with a surge, this indicates that market sentiment is rapidly gathering momentum. When a sudden breakout occurs, it is a prime opportunity to enter the market.

4. A rapid surge in stock price at the open followed by a drop below the intraday moving average, if volume does not increase significantly, suggests that the main force is creating a false impression of strength using minimal funds, aiming to trap buyers. In such cases, it’s best to wait for a rebound before exiting.

5. If the stock is nearing a double top formation but fails to show prominent volume, it likely won't break through. In this case, one should sell. Conversely, if a breakthrough occurs with significant volume, it could be a buying opportunity. As a rule of thumb, if it fails to breach the prior high, one should sell, and if it successfully breaches it, one should buy.

6. If the stock price consistently operates above the average line in a wavering upward trend with increasing volume and the moving averages display bullish divergence, indicating funds are driving the price, it is time to consider entry.

7. The intraday chart should always be used alongside volume analysis; if the stock's intraday chart shows a flat condition throughout the day with low or no volume in both low and high positions, its reference value is minimal.

One trader who has survived in the market has summarized some trading principles that closely match the above conditions. I present them here in hopes that investors can increase their profits and distance themselves from pain.

Both new and seasoned traders often overlook the psychological element of successful trading. Trading is undoubtedly one of the most stressful jobs globally, akin to fire-breathing acts or bomb disposal.

Trading performance often resembles a roller coaster—climbing high one moment and plummeting the next—mixed with joy and sorrow. A single misstep could shatter an investor's mindset and devastate their spirit. Upon entering the trading arena, such experiences become inevitable; however, investors can learn how to manage these situations and even find ways to profit from them.

1. Focus on long-term goals. Avoid altering trading methods based on short-term performance. Short-term outcomes may present flashy results for any strategy at times, yet cumulative long-term results could be dire. Additionally, the best trading methodology will inevitably incur losses periodically. Thus, judging the quality of a strategy based on short-term performance might exclude the most effective methods and ultimately lead to losses.

2. Avoid self-centeredness. Being self-focused is a lethal flaw for top traders. Such cases are common; don't fall victim to this mistake. Self-centered traders struggle to accept losses and are often unable to withstand successive downturns. This leads them to evaluate trading strategies based solely on short-term results. When the market doesn't move according to their disposition, they hastily exit, which is a major investment blunder.

3. Rely only on oneself. When trading, never think of depending on others for your success. The individuals one may rely on might not even be successful traders themselves. While exceptions exist, they are few and far between. Only by trusting oneself can one achieve more. It is crucial never to blame one's failures on others. Regardless of how dire the situation becomes, one must take full responsibility for their decisions. Only by doing so can one correct mistakes and avoid repeating them.

Those who genuinely profit from trading often have the simplest approaches.

The essence of trading lies in: simplicity, persistence, and repetition.

The essence of life is: broad-mindedness, frugality, and humility.

A middle-aged man, wearing a look of anguish, once sought the counsel of Plato, saying, “What can I do to alleviate my life’s pressures? I feel as though I can hardly breathe!”

Plato did not answer him directly but instead gave him a bag and said, “Come, I will take you to a gravel path. Pick up every beautiful stone you find and place them in this bag.”

Upon reaching the gravel path, the man was amazed at the unique and crystal-clear shapes of the small stones. He eagerly began collecting them into his bag.

Halfway through, the man felt the bag becoming heavy, yet upon seeing more beautiful stones, he couldn't resist and continued to add them. Eventually, he found himself overwhelmed and unable to carry on.

At this moment, Plato laughed heartily and said, “Now do you see how the pressures of your life arise? It is your excess desires weighing you down.”

The man suddenly had an epiphany.

“The joy derived from material desires is shallower and narrower than the joy of life itself; it is also lower than the joy of the spirit.

The joy of life is that which lies in its foundation, inherent in the vastness of nature, profound and expansive. Yet material desires not only disrupt the purity of life but also obscure its genuine necessities and joys.”

The simpler the information, the deeper the contemplation can be maintained. The more one focuses on fewer yet profound matters, the cleaner one's spiritual life becomes. Simplicity is the distillation and elevation of the complex values of life. It is the refining and creation of the colorful social experiences. Only by simplifying desires, spirit, and information can we rid ourselves of anxiety and complexity, returning to simplicity and authenticity.