Don’t jump on the 3 big pits of frequent trading

During the afternoon tea time, Xiaoyi invited: “It’s 3 o’clock soon, do you want to make coffee together?” “It’s almost 3 o’clock? I have to redeem the fund first!” As soon as I heard that the trading time was about to pass, Xiao Jun couldn’t take care of it. What afternoon tea, hurriedly took out the phone and started operating. “Didn’t you just buy it last week? Why are you going to redeem it?” Xiao Yi asked in confusion. Xiaojun sighed: “After I bought it, it fell for 5 consecutive days. Why do you still keep this kind of plague foundation?”

Just when Xiaojun was about to press the OK button, MsC stopped her: “Xiaojun, you trade so frequently, be careful to fall into the pit.” Xiaojun asked: “Isn’t it enough to buy and sell funds and make money? What’s the relationship between infrequent?” “The relationship is really not small.” MsC told Xiaojun: “The first big hole that frequent trading brings us is the increase in the probability of loss.”

MsC listed a set of data for Xiaojun: According to Wind data, if we buy the China Securities Partial Stock Fund Index at the closing price on any day in the past 10 years, it will take an average of two and a half weeks to make money, and the longest need to wait 26 months. “Xiaojun, your weekly investment is too short to determine whether the fund is good or bad.” MsC continued to give an example: “If we buy the partial stocks of China Securities at the closing price any day in the past 10 years If the fund index is held for one month, the probability of obtaining a positive return is only 54%; the probability of holding a positive return for 1 year can increase to 64%; the probability of holding a positive return for 3 years can reach 75%; the probability of holding a positive return for 5 years can be Reach 100%.”

“Then I might make money with two more weeks?” Xiaojun asked. “I can’t guarantee this.” MsC smiled, “But in general, the shorter the holding time, the higher the possibility of loss.” “Isn’t it just a loss? I’ll make it back next. Is it all right?” Xiaojun replied disapprovingly. “Sister Xiaojun, take a look at your investment record. Whether the next deal will make money is still unknown.” Xiaoyi vomited.

“Xiaoyi’s concern is not unreasonable.” MsC continued, “In addition to the high probability of loss, frequent trading may also reduce our investment yield. For example, we have bought the CSI at the closing price any day in the past 10 years. For the stock fund index, the average yield of holding for one month is only 0.6%, the average yield of holding for 1 year can reach 8%, holding for 3 years can reach 27%, and holding for 5 years can reach 57%. ”

Xiaojun heard the mystery from MsC’s words: “Although it’s only 0.6% a month, but accumulating little to make more profit, there will be 7% in one year!” “Don’t be too happy, the second biggest of frequent trading The pit is waiting for you.” MsC’s cold water poured over, “The more frequent the transaction, the higher your transaction cost will be.”

According to MsC, according to Haitong Securities’ estimates, the cost is calculated at the best rate of 0.5% for one subscription and redemption, regardless of changes in net worth. Subscription and redemption once a month will bring about 5.84% loss of income per year. On the contrary, long-term holding can greatly reduce transaction costs. At the same rate of 0.5%, if you trade once a year, you will lose 0.5% per year; if you trade once in 5 years, you will lose only 0.1% per year, which is almost negligible.

Finally, MsC concluded for Xiaojun: “You trade so frequently, you are purely working for a fund company.”

“Stop talking… My mentality is about to collapse.” Xiaojun replied in frustration. MsC told her: “For investors, the shorter the holding period, the easier it is to pay attention to the short-term market, and the easier it is to be affected by short-term market sentiment, leading to chasing ups and downs and investment losses. This is also the third major issue of frequent trading. pit.”

“I have jumped so many pits at the same time, Xiaojun sister, please give up the treatment.” Xiaoyi came out to make up the knife without losing the opportunity. “You see that I am so humbly and studious, can’t I save it again?” Xiaojun asked unwillingly. “I want to get rid of the frequent trading problems, but I have two suggestions.” MsC concluded:

1. Buddhism fixed investment. Develop the habit of long-term investment through regular fund investment and avoid frequent short-term transactions. 2. Try to choose a low entry to avoid chasing ups and downs.

“Have you heard a golden sentence?” MsC asked Xiaojun, “The best fund investment is to buy it and forget it, and come back after 10 years.”

“But I just can’t forget what to do…” Xiaojun replied helplessly, “Who makes me have such a good memory?”

But… how can you never remember the financial knowledge that MsC said?