Someone asked me, after how much of the principal is lost, the hope of recovering the investment becomes very slim.
I have also thought about this question for a long time.
In theory, as long as the right method is found, even if there is a huge loss, it is possible to make a profit, but in reality, if the principal loss exceeds 30%, the number of people who can finally recover the investment is very few, and the proportion is very low.
Among the old stock investors who are still in the stock market, more than half have made money, and very few have lost more than 30%.
And those who have lost 30%, in the end, are either leaving the stock market or not playing stocks, and just lying flat.
The profit and loss ratio, seemingly not so important, but in fact, it is so important.
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30%, determines the awakening of an investor.
It is not so easy for retail investors to lose 30% at once.
A full position in a stock, after three consecutive daily limit down, will also lose 27.1%.Apart from 2008, the year when the Shanghai Composite Index suffered the most was 2018, dropping by 24.59%.
In other words, if we calculate based on the index, it is quite difficult to fall by 30%.
But why do a large number of investors lose 30% or even more?
This point actually requires self-reflection, to figure out where the mistake was made, which means it is necessary to have self-awareness.
If one can find their own problems, such as trading too frequently, incorrect stock selection ideas, chasing rises and selling falls, stepping on a mine, etc., then there is still hope.
If one cannot find the problem and does not know how they lost so much money, then it is really over.
30% of the capital cost is used to pay for tuition fees, but no useful information is learned.
If the awareness is too low, it is really not suitable for stock trading, and it is also very difficult to turn losses into profits.
If you try to make mistakes in a divided position, with a position of 30%, and lose 10% each time, it is a loss of 3%.
Then 30%, at least it is 10 losses, and it must be consecutive losses.The trial-and-error cost has already been extremely high, yet the root of the problem has not been identified. If there is no awareness of the market, continuing to do so will only increase losses in vain.
30% is the red line of awareness. If there is no growth at all, then I'm sorry, leave this market.
30% determines the character of an investor.
A 30% loss can reveal the character of an investor.
Investors who want to make a little money for grocery shopping often do not suffer particularly large losses.
This is because they themselves are content with a small fortune and are relatively cautious.
Most of those who can lose 30% are relatively aggressive investors.
You will find that when they buy stocks, they don't care at all what the company does. They don't look at the fundamentals, only the stock code.
This is not to say that pure speculation will definitely lead to losses, but the risk will definitely be greater.The risks are high, yet they can't control their hands, and they fail to manage their drawdowns well. Investors of this kind often trade stocks with emotions.
Generally, those who trade with emotions are ultimately destined to lose money, because the market is an emotion harvester.
Therefore, it's easy to see an investor's character at 30%, to determine whether they are suitable for stock trading or not.
The masters of stocks always look calm and composed, because they have no emotions at all.
They make good use of their risk control system to ensure the drawdown rate of their accounts, and can think about trading decisions with peace of mind.
People with restless personalities are not suitable for stock trading, and should leave when it's time to leave.
As for those who are full of gambling nature, don't play in the market anymore, because the market can't accommodate such people, because the market itself is unfair.
Small capital and large capital compete, just like retail investors and the market makers, the chances of winning are already very small.
The character that is obsessed with competition is doomed to a failed outcome.
And those who calm down can often find some patterns, and thus make money.The so-called law is not actually complicated. For example, when the overall market falls, high-quality stocks tend to fall less, which is a law.
For instance, when the market rises, leading stocks tend to rise more, which is also a law.
30% determines an investor's ability.
The boundary of 30% establishes an investor's stock trading ability.
The concept of ability may be relatively broad, but 30% is a relatively good standard result.
Ability mainly includes the following points.
1. Learning ability.
The so-called learning ability actually refers to the time and effort spent from not understanding to understanding.
Learning ability is really very important because entering the stock market is actually a state of complete ignorance.You only know to buy low and sell high, but you don't know where the highs and lows are.
Learning ability can quickly help us understand the market, from rules to trading patterns.
It can be said that it's true that you have to pay tuition fees on the way to growth, but what exactly can you learn behind each tuition fee.
Losing money is a lesson, what's behind the lesson is really important.
People with poor learning ability lose money and get nothing.
On the contrary, those with good learning ability understand where there are pitfalls, and will detour in the future.
Learning ability is really very important, it determines whether you can make effective trial and error, and quickly find the way to get started.
2. Trading ability.
Trading ability is also a very core element.
Because the stock market itself is a game of buying and selling, trading ability is the most fundamental ability.Some investors understand the principles, but often make mistakes during the trading process.
On one hand, it's about discipline, and on the other hand, it's about the trading ability itself.
Trading ability refers to the reaction and judgment skills at the moment of buying and selling.
Indecisive investors definitely lack trading ability.
But this does not mean that buying and selling impulsively equates to having trading ability.
Some people call trading ability "market sense," which is essentially the accuracy of trading and the ability to execute according to trading discipline.
3. Adaptability.
Adaptability is also an important ability in stock trading.
If you have lost 30%, it is definitely due to encountering a major bear market. At this time, what is needed is adaptability.
What should you do when the market changes beyond your expectations?The translation of the provided text into English is as follows:
This kind of adaptability, or rather, the decision-making ability under emergency situations, becomes extremely important.
Adaptability itself is not just innate, but is acquired through continuous learning in transactions.
Always remember one thing: the market is changing, and one must adapt to the changes in the market.
When the fundamentals deteriorate, or when there is a significant positive stimulus that reverses the situation, change is still necessary.
The 30% safety line is provided for you to adapt, to give you a bottom line for admitting mistakes, not to make you stubbornly deal with it.
4. Reflective ability.
The last one, and also the most important, is self-thought and reflection.
It may be a bit different from learning ability, but reflective ability also plays a pivotal role in the entire process.
We need to reflect on the matter of stock trading, from the unknown to the known, to the changing.
We need to reflect on our trading patterns, our trading strategies, our trading mentality, and our trading principles, to see if there are any problems with these.Only through reflection can we better grasp future transactions.
In front of the market, we are all insignificant, and every loss is a signal that prompts you to reflect.
30% can let you know whether you are an investor who can survive in the market. This red line is the ultimate big exam for most people.
If your score is above this, there is still a chance, and more effort is needed.
If your score is already failing, it's time to reflect on whether to continue.
After all, stock trading is not a must for everyone's investment path.