Chapter 44: Knowledge is the most important thing in the stock market
Buy? Or not?
What if it falls below 100 yuan? What if it falls to 100 yuan?
Lin Menghan was torn between conscience and desire in her mind. She raised her fingers slightly, but did not lower them for a long time.
Wait with empty warehouse.
It is easier said than done.
Especially for Lin Menghan, who had just obtained 1 million yuan in funds and was looking forward to making great plans and proving herself, how could she suppress the restlessness of trading in her heart?
Not to mention some new investors who have just entered the stock market. I am afraid that being short of money for even one second would be a torture.
Li Feng saw her hesitation, sighed softly, and said, "Of course, these are just suggestions. I'm giving you some reference. The specific trading strategy is up to you."
"Well, I'll buy 100 shares first to test the market." Lin Menghan couldn't resist the temptation in her heart after all, and bought 100 shares, and the transaction was completed at 125 yuan.
Finally, she consoled herself by saying, "I learned from you that I should buy 100 shares first so that I can continue to track the stock's movements."
Li Feng didn't respond, but instead changed the subject and asked, "What do you think is the most important thing about stock trading?"
“Mindset!”
After Lin Menghan finished speaking, she glanced at Zhao Xinyue.
She then explained:
"When it comes to stock trading, the most important thing is your mindset. You have to be able to endure both loneliness and prosperity. You have to be greedy when others are fearful, and fearful when others are greedy. If your mindset is not good, all your technical operations will be distorted. I still need to work on my mindset. Sometimes I just can't resist the urge to trade. I just bought those 100 shares because I wanted to calm my mind. Otherwise, I would be thinking about it every day for the next few days..."
Zhao Xinyue hesitated for a moment and added, "Technology? Having the right mindset alone won't cut it. Without the right skills, you can't make money. I'm in urgent need of technical knowledge."
"Li Feng, do you think we are right?"
Li Feng nodded, then shook his head and said, "What you said is both right and wrong."
"Why?" Lin Menghan asked puzzledly.
"Because in the stock market, mentality and skills are certainly important, but there is another crucial aspect that many investors don't pay attention to, and that is cognition," Li Feng said. "To a certain extent, cognition is even more important than mentality and skills. It's no exaggeration to say that it's a hundred times more important."
"Cognition? What is cognition?" Even though Lin Menghan is an old stock investor, he was confused.
Li Feng explained: "Simply put, cognition refers to a person's view on a matter. Specifically, or to use my own definition, it refers to a stock investor's perception and understanding of the entire market. This is an essential quality for a qualified stock investor."
"We need to integrate various information to determine what stage the entire market is in, whether it is a bull market or a bear market, and which stage of the bull market or the bear market it is in, and adopt different trading strategies according to different market stages."
"If your understanding is correct, you can hold stocks in a bull market and wait for them to rise, and go short in a bear market. If your understanding is wrong, your operations will be distorted. In a bull market, you will frequently change stocks and lose money instead of making profits. In a bear market, you will frequently trade and sell stocks at a loss."
“It can be said that cognition determines the success or failure of your investment!”
"This is what I've said repeatedly before: you can make big money by following the big picture. When investing, you need to follow the big picture and go with the flow, not against it. In the stock market, there's no such thing as tears and the idea that man can conquer nature."
Having said that, Li Feng picked up the teacup and took a sip.
Lin Menghan and Zhao Xinyue fell into deep thought again.
After a long pause, Li Fengfu continued, "Cognition can also be specific to a particular stock. This is cognition in a narrow sense. As for mentality, it is the result of cognition. When cognition is insufficient, the mentality will certainly be hesitant. When cognition is sufficient, there is a clear mind, so how can there be hesitation?"
"It's like when you do arithmetic, one plus one equals two. You definitely can't make a mistake. Why? Because you have the right understanding and know it equals two. But for a child, their understanding is not so clear, so they either don't know the correct answer or they will make a mistake."
“It’s the same in the stock market. When you have the right understanding, your mindset will be right too.”
"As for technology, it can be broadly divided into value investing and technical speculation. Value investors primarily study the quality of stocks, buying low and selling high, profiting from revaluations and corporate growth. This is understandable. But for technical speculators, if you simply study K-lines, MACD, golden crosses, death crosses, immortal guidance, and three yangs, whether the market is bullish or bearish, it's a dead end!"
At this point, Li Feng said very seriously:
“K-line trends, volume indicators, moving average patterns, etc. are all very useful, but please note that they are tools used to describe the past and present trends of stocks and cannot be used to guide or predict future stock trends.”
"If you use these technical tools to guide your investment, it's like trying to catch fish in a tree, and you're courting death!"
"Especially in a bear market, especially in stocks controlled by market makers, they create one trap after another, draw one K-line after another, and harvest retail investors. You could say they can draw any line you want, and they can give you any volume you want. There's always a way to suit you, and there's always a way to harvest you!"
"I still say the same thing. You're not the dealer, you don't have any special abilities, you don't have insider connections, and you don't have financial advantages. How can you be so confident that you can beat the dealer? You're dreaming! It's something that only exists in dreams!"
"You must recognize this reality: in this stock market, the market makers are here to exploit retail investors. You retail investors simply cannot defeat them! There's no such thing as a one in a million chance, there's only a ten thousand chance!"
Li Feng's words were very harsh.
Zhao Xinyue didn't feel anything. She was just a new stock investor, a blank slate, who knew nothing and found everything new to her. Naturally, Li Feng could describe it however he wanted.
But Lin Menghan is different.
Since entering the market, she has been specializing in technical analysis.
Although, under the influence of Li Feng these days, I have read many books on value investing, but I only understand the basics.
At this moment, hearing Li Feng's flatly denying the technical analysis, he felt extremely unbelievable.
She couldn't help but open her eyes wide and retorted:
"If technical analysis is as rubbish as you say, then how has it been around for hundreds of years? And why are so many retail investors using it?"
Li Feng smiled and said:
"Technical analysis is simple and easy to learn. It's been passed down through countless generations and has become the perfect tool for market makers to exploit retail investors. Naturally, this is the stock trading method promoted in the market."
“You can learn it, but you can’t become obsessed with it.”
"If you want to use this tool to make money, that's fine, but you have to use other tools to supplement it. Of course, you also have to understand your own position and know what you are doing."
"You must always understand that the essence of technical investment is a game of pass the parcel. When you're staring at the K-line, you must remember to look for someone around you who might take the chips. If you can't find one, then you're the one taking the chips. If you can find one, you can calculate your odds, place your bet, and pass the chips to the next person."
“Technology investment, in essence, should be a game of strategy, not a game of looking at pictures!”
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