In the stock market or blockchain trading market, we often hear a word called "chasing up and killing down". When prices skyrocket, we will follow suit, and when prices fall, we will flee collectively. Many people regard chasing up and killing down as a derogatory term, which is a symbol of retail transactions and a typical failed investment strategy. But in fact, most retail investors are actually "chasing up and killing down", while large speculative institutions have been "chasing up and killing down".
For example, in the recent hot blockchain, many retail investors saw the price of BTC, which was as high as10.2 million RMB per BTC in the highest period. At this time, everyone thought that the price was too high, and many people chose to leave their bags for safety. When the price of BTC is low, a large number of people start to bargain-hunting, or start to dilute the original purchase cost at a low price. Think about it, are the aunts and grandmothers around you scrambling for the bottom when they see the stock falling, and fidgeting when they see the stock rising? For example, Maotai, Tencent, Alibaba and other stocks, how many investors got off midway? For example, BTC, ETH, EOS and other blockchain projects, how many people around you can hold it?
On the contrary, as institutional investors, they are more inclined to "chase up and kill down". They use this as a trading strategy and widely use it in their own investment behavior. They have a very tall name called "momentum trading". The word momentum comes from physics. Generally speaking, the momentum of an object refers to the tendency of the object to keep moving in its direction of motion, which is a bit like what we usually call inertia. Momentum applies not only to physics, but also to the financial field.
In the stock market, many institutions will sort the returns of a package of securities bought within a specified time, leaving the high returns and selling them directly with low returns or even losses, just like what we usually call the last elimination system. Through a lot of practice, institutional investors have gained rich returns. According to the arbitrage principle, if you can arbitrage in the short term, this arbitrage opportunity will disappear with continuous trading, but in the long run, this arbitrage opportunity shows no signs of disappearing.
This also shows that momentum potential energy is a systematic risk, not an individual risk, so it can remain stable for a long time. According to the momentum logic, we have the same trading strategy by analogy to the blockchain virtual currency trading market. It's just that the blockchain trading market is extremely imperfect and there are few institutional investors, but this does not mean that momentum trading does not exist. One day in the currency circle, one year on the earth, this sentence is used to describe the rapid change of currency circle transactions, in fact, it reflects the speed of momentum change behind it. For example, before September 4, 20 17, there was a bull market. After experiencing a small bear market after September 4, it was in a bull market until the end of 20 17, and then entered a bear market during the Spring Festival of 20 18. After seeking a small bull market in mid-May, the blockchain market is now in a bear market.
Observing the above time node by yourself, you will basically complete the conversion of bull and bear once every quarter, which is very fast. Let's look at the stock market again. It will take several years to complete the conversion between bull and bear. Therefore, in the blockchain market, the potential energy of kinetic energy comes and goes quite quickly. Just like a river, if the river is particularly swift, the waves will come and go quickly. In this metaphor, we can think of momentum as waves. Of course, whether it is the blockchain investment market or the stock trading market, momentum trading is not omnipotent, and there are certain risks.
In the financial course of Peking University, we should pay attention to the corresponding risks about momentum:
When the market is bad, momentum trading is very easy to lose money For example, from 2008 to the beginning of 2009, in this financial crisis, the momentum strategy in the US market suffered particularly heavy losses, and so did China. In the June and July stock market crash of 2065438+2005, the loss of momentum mechanism was particularly serious. Therefore, the momentum strategy is not suitable when the market fluctuates greatly.
② It is particularly relevant to the institutional design of China's market. Because momentum strategy needs to buy up and sell down, it is equal to having a risk hedging mechanism. China lacks short-selling tools and short-selling mechanism, so you can only chase up, but it is difficult to kill down. In this way, your strategy is only half a strategy, not a complete strategy.
It is important to remember that momentum trading is not chasing up and down a single stock, because those stocks that have soared are more likely to rise next week, and those that are now falling are more likely to fall next week. If you buy and sell a stock, you may just step on that small probability point. The momentum trading strategy you want to do is to buy and sell a portfolio with diversified risks, which requires a very large amount of funds and is generally difficult for American retail investors to operate.