[Starting from Scratch in Stock Trading] How to identify stocks that are about to surge

Judging stocks that are about to surge is both easy and difficult. Here are some examples: after news about the Beijing Securities Exchange came out, stocks in related concept sectors surged significantly. Several years ago, when the news about the Millennium Plan for Xiong’an was released, the Xiong’an sector also experienced a rally. The difficult part is that most people find it very hard to do so.
When good news appears, it often triggers a wave of profit-driven capital pushing prices up. Psychologically: no one believes they will catch the last wave; everyone feels there will still be latecomers to buy in, until the subsequent funds are exhausted and the market suddenly turns downward.
In fact, if you could predict in advance and accurately judge the content of good news before it appears, you could easily make money. In reality, this is very difficult; having such foresight might be easier with lottery tickets, which require small investments for high returns, or by gambling at a casino with bets on big or small, which can more easily double your money repeatedly in the short term.
Some so-called “experts” who claim to know the subsequent policies and news are most likely relying on insider information. Insider trading is illegal; aside from the risk of being scammed by insiders, going to jail to make money is not worth it.
So, without insider information, how can you find stocks that will soon have good news?
First, you need to understand what the stock market mainly speculates on. Stock trading is about speculation on expectations; exceeding expectations requires strong information grasping ability. The same piece of news can be interpreted in multiple ways, and different people think differently. You need to use your information processing skills to find insights others might miss.
Develop the habit of asking yourself questions: “1. Is this information known only to a few people?” “2. Is there any information I haven’t yet understood (traps)?” “3. Why should I be the one to profit?”
Collecting information is equally important. Besides the websites mentioned in the previous article “Stock Tools,” you should also develop the habit of reading news and watching news broadcasts.
If you have enough energy, you can try categorizing all stocks; when encountering special event news, you will react faster than others.
You can try using ambush strategies instead of chasing the rise. Generally, those who chase the rise base their trades on “golden pits” patterns or “moving average convergence,” but a single mistake can wipe out previous profits.
Pre-emptive ambushes are better; they usually involve finding stocks at low levels with low trading activity. These types of declines are limited, and their risk resistance is stronger.
However, this requires more time and patience.