How much do many investors really understand about stocks, even though they participate in stock investments? Is it a whim or the thought of making easy money that leads newcomers to enter the stock market?

Entering the stock market with the aim of making easy money, only to find out that it's not easy to earn and that losses outweigh gains.

There is an underlying thought that it's time to learn some stock knowledge, as the losses are due to a lack of understanding of stocks.

When investing in stocks, we need to understand what the stock market is. The stock market is an important part of the market system, capable of resolving capital supply and demand conflicts and liquidity, and can reflect and adjust the liquidity of monetary funds.

For ordinary people, buying stocks is equivalent to owning a part of the capital of a listed company, which can be transferred through stock trading software.

Generally, to trade stocks in the A-share market, we need to open an account with a securities brokerage firm, and trading stocks also requires paying certain fees, including stamp duty (only collected when selling, at 0.1% of the transaction amount), handling fee (0.0696% of the transaction amount), regulatory fee (0.02% of the transaction amount), transfer fee (0.02% of the transaction amount), and brokerage commission (usually 0.3% of the transaction amount, with a minimum of 5 yuan).

Advertisement

How much do you understand about the intricacies of stock trading?

The way of trading, the rigid is easily broken. Only the utmost softness and flexibility can dominate the world. Among all things in the world, nothing is softer and weaker than water, yet the highest virtue is like water.

Success is equal to small losses, plus small and large profits, accumulated many times.The art of trading lies in securing a position where one cannot be defeated and attacking an enemy who can be won over.

A loss of 50% turns a million into half a million, yet to grow from half a million back to a million requires a 100% profit. Each success only takes you a small step forward, but each failure can set you back a great distance.

It takes an hour to walk from the first floor to the top of the Empire State Building, but it only takes 30 seconds to fall from the top to the bottom.

The key to trading is to consistently maintain an advantage.

The stock market is like a battlefield, where capital is your soldier. Only with the right overall direction can you engage in battle with composure. One should seek victory first and then engage in battle, not the other way around.

In "Buffett's Letters to Shareholders: A Manual for Investors and Corporate Executives," Buffett tells everyone how to become a successful investor.

He says: To be successful, an investor must combine two abilities, one is the ability to judge excellent companies, and the other is the ability to isolate one's thinking and actions from the highly contagious emotions that pervade the market.

The content may sound simple, but it encompasses a wealth of information, and it is even more challenging to put into practice.

One tests a person's cognitive ability, and the other tests a person's ability to control emotions. The first is the ability to judge excellent companies.

It is very difficult to know whether a company is excellent, which requires you to be familiar with the company, to understand what the company does, how it makes money, whether this method of making money is sustainable, where the company's competitive advantages lie, where the future development trends and growth points of the company are, and whether the company's management is exceptionally capable and trustworthy.To possess this ability, one must not only engage in diligent learning but also cultivate the capacity for deep thought and a unique, innate cognition.

Consider this: many corporate executives, who interact with their own companies daily, still struggle to fully understand the businesses they manage and fail to operate them effectively. On what basis can you determine whether a company is excellent or if it has the potential to become a high-performing stock? Most of the time, your positive perception is merely a reflection of your limited understanding or self-assuredness.

The second capability is the ability to isolate one's thoughts and actions from the highly contagious emotions that pervade the market.

This tells us not to follow the crowd or merely echo others' opinions, but to have the ability to think independently and maintain a clear awareness.

To acquire this ability, Warren Buffett chose to distance himself from Wall Street. Anyone who needs this ability should also learn to keep a distance from the market, ensuring that market sentiments do not influence their decision-making.

In the market, when a stock becomes popular and everyone is buying, you must think clearly about who will take over later and where the driving force for future increases will come from. When everyone is making money, who is losing?

Only by possessing the above two abilities and combining them, through in-depth research and analysis, can you determine whether a company is excellent and decide whether to buy or sell based on your judgment, thus becoming a successful investor.

Recently, the stock market has been thriving, and everyone should have made money from individual stocks or funds. I have also obtained a VIP account from a securities firm (with VIP rates). Those who are interested in applying can click to learn more and apply.