Index fund is a kind of fund that tracks the performance of the index to obtain the same income as the index. The biggest feature of index funds is balance and dispersion. According to the different tracking index targets, index funds can be divided into generalized index funds and other industry-specific index funds. Industry-specific index funds have a high risk coefficient because they are concentrated in a certain industry or theme. Index fund is a type of fund that needs timing.

The most important reference to judge the trading point of index funds should be valuation. Generally speaking, we can use the price-earnings ratio to digitize the valuation.

When the P/E ratio of the tracking index is lower than 30% of the historical valuation, it is in a low valuation area, which is a good buying point and can start the fixed investment plan.

When the P/E ratio of the tracking index is higher than 70% of the historical valuation, it is in a high valuation area, which is a good selling point, and you can start to consider selling in batches.

Use broad-based indexes with more appropriate P/E ratio, such as Shanghai and Shenzhen 300 Index and CSI 500 Index.

For the industry index, it is very limited to judge the valuation and determine the trading point with the price-earnings ratio. For example, the valuation of the consumer industry and the technology industry has always been relatively high, so it is not appropriate for us to divide it by 30% or 70%.

How to judge the index valuation level We can use some index tools in the market and combine the historical percentile of P/E ratio to buy index funds when the index valuation is relatively low and sell index funds when the index valuation is high.

Make good use of index valuation indicators and learn to make timing for index funds.