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[Investment] [Investment rules to make a solid profit even if stocks go up or down] How to make money with a downward trend
Roughly speaking
- You make money when your stocks go up, but you make money when your stocks go down.
- Stop orders are a killer way to capture profits and cut losses.
- Inverse type ETFs that make money when they go down.
Stocks upward and downward
The stock market continues to be booming, but are you making good money?
Despite a temporary crash in September, the US continues to maintain its boom with the announcement of Apple's 5G devices and other factors.
Although domestic business continues to be weak, Mothers is leading the boom.
When the stock market goes up, everyone makes money, but when it goes down, everyone tends to lose money.
However, this theory does not apply to professionals. Professionals make money even when they go down.
Professionals know how to make money when things go down, such as risk hedged assets such as short sales and government bonds, and inverse ETFs, and individual investors are often conscious of using the investment.
Individual investors who have just started recently think that their knowledge will not be able to be achieved with professionals. Pros can refer to analyst reports, Bloomberg and are thought to be able to make special orders.
However, recently, the level of analyst reports has declined, the emergence of analytic tools such as Buffett Code, and the availability of margin trading and stop orders on online securities, making it possible to make losses and profits at the same level as professionals.
You can develop assets on your own, not on mutual funds.
This time, we will introduce "New edition of the investment rules that make you earn well even if stocks go up or down: Win the turbulent market" (Ota Tada/Nihon Keizai Shimbun Publishing), a new board of hidden investment books that I personally recommend to people who have just started investing, and we will pick out two words you should know at the very least.
What is a stop order?
The author, Ota, recommends that beginners of investments do not psychologically solve the problem of poor stock losses, but rather solve the problem by using a system.
That is a stop order.
Usually, stocks are purchased in two ways. It's a market order that you can buy immediately, even if you like, and a limit order that you buy by pointing to the stock price.
Stop limit orders are derived from limit orders, and refer to orders that are normally purchased if they are below limit orders, and that are sold if they are above limit orders, while orders that are above limit orders are purchased if they are above limit orders, and that are below limit orders are sold if they are below limit orders.
Stop orders are actually used in two ways: loss confirmation and profit confirmation, so let's briefly explain them together with the diagram.
Stop Order as a Method for Determining Loss (Cutting Loss)
As shown in the image above, I bought it but the stock price fell. It is difficult to have the courage to confirm a loss at times like this.
Therefore, if you are under limit order, you will place a stop limit order when you buy it at the same time. This will result in a loss being confirmed in advance, and you will be able to achieve psychological safety, "This is the worst loss, that's fine."
Some people may think, "It's fine, I'll put my own sell order when it gets cheaper." Those kinds of people will not be able to recognize their losses even if it gets cheaper, and will continue to salt them in the hopes that the stock price will return.
This is one fact of investment, but if you sell quickly and invest in another stock, you're betting more opportunities with the same cash than if you're always investing in a stock that's cheaper. Remember that you place a stop order to bet on more opportunities.
Stop Order as a Method of Making Profits
Personally, I often do stop orders to take profits.
If a stock that has successfully bought its stock price rises, use stop orders as a way to round down the lowest profit-taking line.
The most difficult thing about investing is to determine the ceiling of stock prices.
Once a stock price has risen, it is the classic investment strategy to keep it as fast as possible, but the problem is that you don't know when the stock price will fall sharply.
The decline is faster than the rise in regular stock prices, so if the selling is slow, you will lose the profits you've grown in an instant. (Let's imagine an airline or travel agency that is in danger of causing the cash reserved internally to suddenly be blown away due to the COVID-19 shock. Everything falls in an instant.)
Therefore, you can place a stop order in advance to secure a certain level of profit. This will allow you to realize unrealized benefits with peace of mind.
I also often missed out on profits at first, so I started using stop orders to capture profits more.
In reality, you will not know how far you should cut it down by looking at the charts or by determining how far you are likely to go, so I would like you to train this in separate technical analysis books and practices.
Online securities that support stop orders are DMM.com Securities
And there are SBI Securities and Rakuten Securities. It would be a good idea to start with the Tax-Free Permit (NISA).
What is an inverse that makes money when it goes down?
Short selling is a well-known way to make money when stocks are falling.
Short selling was a way of borrowing stocks from securities companies and selling at a high price, then buying back the same number of shares after it gets cheaper and returning them to the securities companies, making money by taking advantage of the decline in stock prices, which produced many billionaires during the Lehman shock.
There were many investors who made money from short selling even during the COVID-19 shock, but it is very difficult.
In the case of short selling, losses will be infinite when the stock price rises. If regular stock trading drops to 0 yen, the loss will be at the maximum. Therefore, short selling often results in rising stock prices, which are often said to be "starting".
Individual investors can also short-sell, but for the reasons mentioned above, it is not recommended. A simpler way is to buy an inverse ETF.
An ETF is a type of investment trust that is managed in conjunction with indices such as the Nikkei Average or TOPIX.It is an investment trust, but since it is listed on an exchange, it can be bought and sold like stocks.
Inverse is written as inverse in English, and is literally meant moving inversely. When an index such as the Nikkei average rises, the inverse drops.
This allows you to secure profits by taking advantage of the stock market's decline in sales of inverse ETFs.
Inverse can also be bought and sold through major online securities, so it's a good idea to start with a small amount.
Side note
This time I only introduced a small number of books, but this book was so helpful that it gave me the opportunity to invest.
It lists all the sector rotations of IPO stocks and stock markets, stories about cyclicals, how to find good stocks, when to buy stocks, how to sell them, and how to prepare yourself for them. The key point is that it is not too specialized, nor lacks explanations, and there are no oversights or shortages.
It was such a well-written book that I was impressed by the fact that when I read other books later, I was impressed by the basics of that book.
Please read this as a starting point for building assets.