[Summary]
The benefit of knowing what to do with head and tail is not that it guarantees a profit, but that it makes it easier to organize the material you need to look at.
The benefit of knowing what to do with head and tail is not that it guarantees a profit, but that it makes it easier to organize the material you need to look at.
In actual investing, the first step is to take profits and look for buying opportunities without being too greedy. However, it cannot be overlooked that buying and selling is likely to be delayed if you don't like missing out even a little.
In this article, we will explain the benefits of knowing what to do before buying or selling, not as "knowledge" but as steps to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First, distinguish between the head and the tail based on the merits of knowing what to do.
When looking at the benefits of knowing what to do, first determine what you want to judge. The information you need will change depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. The benefit of knowing what to do with your head and tail is not enough to make a decision. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Don't overestimate the benefits of knowing what's going on with your head and tail.
If you want to look at the benefits of knowing that you can give your head and tail, first of all, make a narrow premise. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
Checking the following points will make things a lot easier.
| Axis to check | Seeing things with the benefit of knowing what to do with head and tail |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
It's not only when you don't have enough knowledge that you stumble on the benefits of knowing what's going on. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Decide first what you will be able to see with the benefit of knowing the head and tail.
- Differentiate between conditions that bring about benefits and conditions that do not.
- When expectations are too high, test with a small amount
- Write down the terms of withdrawal before considering profits.
The important thing here is not to settle on a single correct answer based solely on the merits of knowing what to do. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Make sure to check at least these five things before making an actual decision on the merits of knowing what's going on.
- Can you explain in one sentence the purpose of looking at the benefits of knowing the head and the tail?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of confirming the benefits of knowing what to do head and tail is not to make you act faster, but to reduce unnecessary mistakes in judgment.
Summary
The advantage of knowing head and tail is that it helps you organize your investment decisions. Even if you read it as an advantage, treating it as a stand-alone buy/sell signal will make your judgment difficult.
The points to keep in mind are as follows.
- Determine the purpose first by seeing the benefits
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. The advantage of knowing that you can give your head and tail is that it is realistic to treat it as a tool to pause before buying or selling, rather than a word that forces you to make a hasty decision.