Chapter Ninety-Seven: The Moving Average Trading Method is Like Fishing
According to Lu Xiaoqi and Lao Xu's ideas, Sun Haoyang said this trend trading method so well, the accuracy rate of judging the future trend of stocks must be very high.
Under them, even if Sun Haoyang's method does not have a success rate of more than 80%, it should be at least 70%, and the worst, 65% will always be there, that is, at least two of the three investments.
But what they never expected was that Sun Haoyang said that the success rate of this trend trading method was only 30%!
You know, buying a stock is nothing more than two results, one is up and the other is down, generally speaking, without considering the handling fee, the probability of the stock rising and falling is about 50%.
In fact, with the analysis of the fundamentals, technicals, and news of the stock market, experienced short-term traders can increase the success rate of buying and rising to 60%~70%.
The principle and operation method of this trend trading method mentioned by Sun Haoyang are very simple, so Lu Xiaoqi and Lao Xu did not expect this method to be as accurate as possible.
But they can't understand if they want to break their heads, how can this method of claiming to make sure you make money without losing money only has a 30% success rate? With such a low success rate, doesn't it mean that you are sending money to the stock market, and you dare to say that you will make sure you don't lose money with this method? It's almost the same if you don't make a profit.
"Sun Haoyang, are you saying the opposite, you mean that the probability of losing money is 30%, right? The probability of making money should be 70%. Lu Xiaoqi thought in her heart, with a 30% probability of making money, no matter how you think about it, there is a problem.
However, Sun Haoyang shook his head, indicating that he was not wrong just now.
Lu Xiaoqi felt that it was difficult to understand, but he thought about it again, if the probability of making money by Sun Haoyang is really only 30%, then in fact, as long as it is operated in reverse, the probability of making money will become 70%, maybe Sun Haoyang actually wants to express this meaning.
So Lu Xiaoqi said his thoughts, but Sun Haoyang still shook his head and said: "In your understanding, the so-called good operation method is that the probability of making money is high?" ”
"Isn't it obvious, the higher the probability of making money, the more money you can make. Is there any doubt about this? ”
Sun Haoyang smiled and said, "Then I might as well give you an example: suppose there is a stock that has a known probability of rising in the future of 80% and a probability of falling 20%. Would you consider buying this stock? ”
"Of course I would consider buying it." Lu Xiaoqi said without thinking.
Sun Haoyang continued: "Then the next stock is this stock, the probability of rising is still 80%, but the rise can only earn 5%; The probability of a decline is still 20%, but once it falls, it will lose 20%. With this condition added, will you still consider buying? ”
"This ......" Lu Xiaoqi was a little hesitant, although the probability of making money is large, but he can only earn 5% at a time, and if he loses money once, he will lose one-fifth of the principal. This made him a little less chosen.
Seeing Lu Xiaoqi's hesitant expression, Sun Haoyang explained: "Actually, we can use a simple method to calculate.
The probability of making money is 80% and the probability of losing money is 20%, which means that on average, every 5 trades will be 4 times profitable and 1 time lost.
Suppose our principal is 10,000 yuan, and we make four profits in five trades, that is, we multiply 10,000 yuan by 1.05 to the 4th power, which is equal to 12,155 yuan.
Then lose once, multiply 12155 by 0.8 equals 9724 yuan.
In other words, after five trades, we will actually lose a lot of money instead of making money. ”
"Oh, I seem to understand what you mean, when we speculate in stocks, we often make a lot of small money, but if we lose a big money, all the money we earn will be spit out, do you want to illustrate this truth in this example?"
"What I want to tell you is that stock speculation should not only focus on profit probability, but also on expected returns. This is the basis for being able to make money from the stock market consistently. ”
"Expected yield?"
"This is a concept of probability, in simple terms, the expected rate of return = (probability of growth * expected rate of return + probability of decline * expected loss rate).
The investment is only valuable if the expected return on a stock is positive.
Otherwise, like the stock I just gave an example, the more you operate, the more you will lose. ”
Lu Xiaoqi nodded thoughtfully, indicating that she understood what Sun Haoyang meant: "Then the trend trading method you just said is only 30% correct, but it can still make a steady profit without losing money, is it because the expected rate of return is positive?" ”
"That's right." Sun Haoyang took out a USB drive, opened one of the excel files that had been prepared a long time ago, and said: "This is the trend of the Shanghai Composite Index in the past three years that I simulated through the moving average trading method.
In the past three years, the Shanghai Composite Index has seen a total of 18 golden crosses and 18 death crosses. In other words, using the rules of the moving average trading method, you can buy and sell 18 times in total.
Among these 18 buying and selling operations, 12 of them ended up losing money, and only 6 of them made money, and the success rate of making money was only one-third.
But the end result was a profit of up to 650%, while the Shanghai Composite Index rose by only 400% over the same period.
We used the moving average trading method to not only make money in these only 6 profits, but also outperform the index by a large margin. ”
With the foreshadowing of the case just now, Lu Xiaoqi quickly accepted the result this time.
He found that in the excel sheet listed by Sun Haoyang, although the number of losses was as high as 12 times, which was double the number of profits, each loss was only a few percentage points at most. And in those six profits, the profit obtained was staggering.
For example, between September 2006 and February 2007, a profit of 65% was achieved in just one operation using the moving average method.
"The practical image of trend trading is a way to eat fish and eat only the mid-range. When the stock trend turns upward, according to the trend trading method, the individual stock movement will send a buy signal.
And then as the stock price rises, we can get all the gains in its entirety until the stock pulls back and consolidates and sends a sell signal.
Although the trend trading method cannot be copied to the low of the stock and sold at the top of the stock, the most essential part of the whole fish, that is, the profit of the main rising wave, can be earned. ”
"According to you, it's a sure-fire deal." Lu Xiaoqi seemed very excited, and seemed to have begun to look forward to making a lot of money with the moving average trading method.
"There is no guaranteed profit and loss in this world, and the method I am talking about is just a relatively high probability of making money.
In fact, the moving average trading method is like fishing, before casting a net, you must first find the fish, that is, stock selection, otherwise you will choose a plague stock that will not rise for a hundred years, just like casting a net in a swimming pool, never expect to make money.
In addition, the selection of the parameters of the two moving averages of the moving average trading method is also very important, just like the mesh size of the fishing net, the mesh is too small, and all the fish caught are small fish and shrimp, and the mesh is too large, and the fish run away from the mesh.
So how to choose a suitable size mesh is the key to whether you can make a profit, which requires a lot of analysis and experience. ”
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