Methods and techniques for dealing with extreme market conditions

Among domestic investors, Danshuiquan’s investment performance is eye-catching. When its head, Zhao Jun, revealed his investment secrets, he said that one must dare to take advantage of market panic. Only when emotions are deployed against the trend can investment returns that exceed the market be achieved. The following is the method that the editor has compiled for you to deal with extreme market conditions. I hope it will be helpful to you!

What are extreme market conditions?

Market trends are the key to our stock-holding mentality. One of the factors is that the continuation of the market also determines whether we can make money and our strategy in the market, so the judgment of market trends is very important for our auxiliary decision-making, such as the main line sector market (the medical and liquor market from 19 to early 21, New energy market in the second half of 2021), sector rotation market (sector rotation at the end of 21), emotional theme market, what kind of trend the current market is, we can make a simple judgment and then verify it through the trend Our judgment, this is the most basic requirement

In layman's terms: either the market cannot be guessed accurately every day, or the market can be guessed accurately every day, it is an extreme market. Or another way to understand it: the market is either overly pessimistic or overly optimistic, which is an extreme market

Methods to deal with extreme market conditions

1. Control positions, do not chase the rise and kill the fall, it is best to sell high Buy low and maintain a position with a certain amount of room for expansion!

2. It is better to buy an index than to buy individual stocks. ETFs are better than individual stock opportunities!

Why do investors do this?

< p>1. Full position operation: Investors always like to maximize the use of leverage efficiency. The original intention is to enhance returns, but they do not know that while the returns are enhanced, the risks are also intensified. This situation may not be very obvious in a volatile market. Once investors are operating with full positions against the trend (reverse) in a continuously rising or falling trend market, their risks will be exposed.

2. Opening a position against the trend: Many investors like to follow the trend and open positions in the opposite direction, and like to hunt for bottoms and tops. Although there is a certain probability of reversal, more often it may be a continuation of the trend or even an extreme one. Quotes.

3. Don’t admit defeat: In fact, many investors will unknowingly fall into emotional trading as their losses expand during trading. They always think that they are right, the market is wrong, but their opportunities are wrong. But there is a truth circulating in the investment community: the trend shown by the market is always correct. Don't go against the market. After all, entering the investment market is more about profit than fighting spirit.

4. No stop loss: Many investors like to set a stop loss, but do not like to set a stop loss. The reason is that the stop loss is easily triggered unknowingly, resulting in losses despite seeing the market right. In fact, this is not because the stop loss is not good, but more likely because the position of opening the position is not good or the stop loss setting is too small and does not match the market. Stop loss is equivalent to a safety rope for investors. It is not visible at ordinary times. Once extreme market conditions occur, it is an effective way to reduce losses.

What should traders do if they are in extreme market conditions

1. If the direction of the position is opposite to the trend, according to the current market trend, try to place an order directly before the price limit of the position type, and deal with it early and reduce it early. loss.

2. When the first limit has occurred, in order to reduce losses, you should immediately submit a closing order at the limit price and queue up. At this time, whose order is the same at the same price and is placed first in the queue. Only by placing an order in advance will it be possible to close the position smoothly, thereby avoiding the extreme continuous rise and fall situation that may occur later.

3. If you cannot close the first limit, you can try to calculate how much funds will be needed if there are three consecutive limits (if you don’t know how to calculate, you can ask the futures company to calculate it for you). Be aware of the worst-case scenarios in extreme market conditions.

4. During the first or second suspension, you are worried that extreme market conditions have formed. After calculating the available funds in the futures account, it will be difficult to hold on until the exchange's fourth suspension and the forced reduction of positions occurs. If so, you can place an order in the call auction on the next trading day to avoid further losses.