2020 Review
This year will always stay in history as one of the fastest year that passed, since the lockdown has caused many people to lose their jobs, GDP of countries literally reached negative and some countries defaulted as well. However, the stock market seem to somehow cross all times high for the developed and developing countries in 2020 except for few like Australian market and in middle eastern countries. The prediction of this market somehow seems vague and unclear in 2021. We know that the second stimulus(unexpected event) for January will have a positive effect on market, that will hold the positive trend throughout the January as it seem. However, I suppose at this point the stock market is not acting on the logical assumptions. It is now a place where people more than ever try to trade in daily basis and earn money. The main component in calculating the price of the stock is the dividend, but we can see the increase in prices of the stocks of companies that doesn't even pay the dividends. This is the case where the valuation of the company is added to the stock price. As it is considered that when the company is liquidated the shareholders will get their shares worth of assets. This is the case where you can select the sector either for downfall or for progress. As example, putting the invest in Apple stock will not give you much in coming years, as you know the Apple company cannot produce something else that might turn in more customers for them. Nor they can enter into another competitive sector where there are already established products which are of high quality. So, you cannot think of investing in Apple stock for long term. On the other hand AMD, we have the microprocessor company which not only is overtaking the Intel in terms of power consumption, temperature maintenance and processing but also giving a tough competition to Nvidia by building compatible and high performance graphics processors. Also, we know that the PS5 is powered by the Amd processor. Thus, we can assume that it is an expanding company which will always gets more and more customers. More customer meaning higher assets in future which will give higher valuation to the stock price of the company.
2020 was not the year of investment for me but for building some strategies for trading. As I have gained and lost an incredible sum of money on the previous years due to my mistakes. I would like to share my mistakes and the strategies I will be following and I assume should be followed by any trader(new/old) to get the maximum out of the market.
1: Must use Stoploss. Do not wait and assume that the stock will get back to your favour and you will get out of the position. One of the thing you should remember always that the position you have taken on stock is also taken by thousands of other people, and reverse position by other thousands. So, your loss will only mean their gain, thus if these winning people will close thier positions on thier profits that means there will be a change in supply demand, which will make the stock position more unfavorable for you as you are still holding(like thousands other people). Thus use Stoploss based on your confidence level, say 50% if you are very confident and 20% for low confidence.
2: Use take profit price. You cannot hold on to your stocks forever, since everyone needs money. Also, nobody knows the future of the company will be, we all can just assume. You can be rich with the stocks in one year and can lose everything on other. So, the take profit is as important as the stop-loss. Both of these things gets extremely important when you are trading in options. As we know option price is also dependent on time too.
3: Study the company, sector and the trend. Studying the company and selecting your stock is very important procedure. If you are a long term investor, you should take a lot of time studying and finding the future needs and the capabilities of companies that can fulfill them. For example, do not go blindly on tesla because you are looking at future with it. We know that PayPal was only the best way to transfer funds but we have many competitors against it now. Similarly, if there will be demand in electric cars there are so many companies that can adopt to the demand and can provide more cheaper and efficient electric cars with their resources. So, choose stocks based on reality than on imagination. Following the trend is also important because you cannot invest your money in the beginning of recession, as you will only see decline on your investment for 5-6 years till it stabilizes and you will be at 0% profit.
4: Don't buy stocks on someone else's idea. Hear the opinions of as many people as you can about a certain stock and then decide to buy it or not. Remember that the decision should be yours only, because if you take the responsibility of your own loss, your decisions will get much better later and you will be more cautious. I suppose moomoo community has a lot of people who shares high quality ideas on every possible stock.
5: Meditate. It is very important for people who are trading stocks to meditate, as it will give them control on their feelings such as excitement, nervousness and anger/frustration. I have realized that meditation will give you a power to make you aware of your feeling, that means you will know that you are angry or frustrated during this next trade and you can take control over it. If you lost it you should forget it rather than thinking about it again and again, like how much money you could have gained or you should have not traded this stock. If you did it, take it as an experience and move forward. The experience/knowledge is more important than the profit, because with knowledge you can earn more in future.
6: Record your profits and losses with your emotions during the trade on a book. You should not only record the profit but also the loss. It is a very important method by which you will see that your losses entry will get shorter and shorter every day. You will see a trend where you always realize that your position will not work for you and you will exit that position before you suffer any loss.
7: Never enter all in with your money. Even if you think that you are extremely sure of something, do not invest all your money in a position. I realize that we can only see the profit money during that position but the consequences are only seen after we lose our invested amount. At the end of the day stock market is like a game of blackjack, where you don't know what the next card will be, so take out your investments as a winner before getting busted.
8: Study indicators. Indicators are very essential for someone who does weekly or daily trade. With indicators you will know what position is taken by people and what is expected to be taken. Moomoo offers many indicators to study. I recommend macd, sa, va and ea. Macd can derive a graph with a high probability of accuracy. The more you study indicators the more easier you can take your decisions.
9: Always check for gaps in stock prices. There is a rule in trading that the gap always closes. These gaps can only be observed in candle stick graphs(is already available in moomoo) . So, if you see the gap in the beginning after market opens, the stock will go down or up closing the gap of the stock. There also exists weekly and monthly gaps where you can take your position for long term.
10: Always follow the trend. If you are looking at a stock or market going upwards you can take a buy position, as the trend of the stock or market will follow until it reverses. Now, if you are unsure about the negative trend, you can wait for few weeks or month until you are sure and then you can start taking short positions. Since, once the negative trend will continue it will follow the path for the same amount of time it took to go upward.
Finally, I hope the year will bring more profits to the mooers, in positive or negative both trends. The community will always present their ideas on both trends so we all can trade in any possible condition and earn/extract as much profits as we can. Have a great trade !
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Verdiand Clive : Thanks for sharing. learned a lot![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
treydongui : hey buddy you have me there till the end. I like how you started out with a macro view and then continuously got into more detailed subjects as you moved on. there are many of us here that are in the same exact position that you are. but unlike most people that sounds like you're one of the few that will actually put in the time to be educated and totally understand the markets on a deeper level. Those people are few and far between cause everyone thinks success will come sooner or later instead of educating ourselves to understand how to manipulate the chances of success heavily in our favor and ultimately manipulate success to come to you/us. Using knowledge and wisdom. I do want to let you know that even though I say those people are few and far between there are more of them on moo moo than anywhere I've ever seen. Allot of smart determined ppl who are just like us, putting in the long hours to perfect their craft and most importantly share with others here. And if there's anywhere trying to open the doors to create an environment where we ALL FEEL COMFORTABLE ASKING QUESTIONS OR CONTRIBUTING TO THE LEARNING PROCESS AND EDUCATING OURSELVES AND OTHERS WITH US on how to make a come up, right now it's gotta be Moomoo. They got their finger on everything happening here on the exchange. They don't let unmet needs go unaddressed. Then they often surprise us with helpful indicators and education or build the app in ways that benefit us, and they have had a few promotions and rewards so far as well. I digress though, apologies.
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I like your ideas and your willingness to put your opinions out there. thanks for posting I appreciate your comments and I hope to hear more from you in the future buddy. take care and best of luck making it rain in 2021
Knulp : Wow buddy, great recap!!
FiveHundredCents : I will say EXCELLENT three thousand times!!!
curtaincall : I like your name lol, and agree with everything said above.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Moomoo Event : Thank you for sharing such a terrific review![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
~ But please make sure you @ at least one of your friends and include some trading notes or P/L diagrams in your post to be qualified to win the free stocks~![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
CCHHVV : Thank you for openly sharing what you learned through your experience and other tips. I can feel the sweet and bitter that comes with that experience. Really appreciate you creating this post!
Spartakus : now that's wats you said a mouth positive words is great news to me thank you for the help and the opportunity to enlighten us
OldNormanBates : Bravo
Winner!
KGodd : Learning a lot from this last year