[Summary]
It is efficient to understand the basic terms that often appear in investing by dividing them into ``how to make profits'' and ``trading methods.'' In this article, we will summarize terms and points to keep in mind that are always used in practice, such as capital gain, income gain, and margin trading.
Heading ① Types of profit: Capital and income
Conclusion: The strategy will change depending on whether it is profit from price increase or continuous income
capital gain
One word: profit from sale Details: Profit from buying low and selling high
- Stock price needs to rise
- Often aimed at short to medium term
income gain
One word: Earnings while holding Details: Continuous profits such as dividends and shareholder benefits
- Good for long-term investment
- Even if there is income regardless of the stock price
comparison
| type | Features | suitable person |
|---|---|---|
| capital | price increase profit | A person who can follow price movements |
| income | stable income | People who want to hold it for a long time |
Headline ② Mechanism of margin trading and short selling
Conclusion: Increased return comes with increased risk
Margin Trading
In short: How to borrow and trade Details: Deposit collateral with a securities company and borrow funds and stocks to buy and sell
- Large trades possible with small funds
- Losses can easily increase (leverage)
Short Selling
One word: Aim for profit from the decline Details: Borrow stocks, sell them first, buy them back cheaper
- Opportunity to profit even in a down market
- As the price rises, losses increase (theoretically infinite)
Points to note
- Beginners should basically start with spot trading.
- Risk management is essential
Headline 3: How to read market prices: Trends
Conclusion: The basic strategy is not to go against the flow
What is a trend?
One word: price direction Details: Which direction is the market moving?
- Uptrend: New high prices continue
- Downtrend: New lows continue
- Flat: No sense of direction
Practical tips
- “Buy on the edge” when it is rising
- Don't force yourself to buy during a decline
- Be aware of trend changes
Heading ④ Failure example: What is salt pickling?
Conclusion: The biggest risk is not being able to cut your losses
salted
One word: Leave the unrealized loss as it is. Details: Stock prices have fallen and it is difficult to sell.
why it happens
- The expectation that “I will return someday”
- Psychology of wanting to avoid locking in losses
Workaround
- Decide your stop-loss line in advance
- Make decisions based on rules, not emotions
Summary
- Profits are divided into “capital” and “income”
- Margin trading and short selling are high risk
- Basic strategy is to follow trends
- Loss cut rules are important to prevent salting
Action:
- Decide on the type of profit you are aiming for
- First, gain experience in spot trading
- Be sure to set stop loss rules