What Are the Five Steps of the Stock Selection Method?

1. Volume Ratio
   After the market opens, we first check the volume ratio ranking. Any stock with trading volume has the potential to rise at any time. It’s impossible to select a limit-up stock based solely on this criterion. Next, we look at the second factor—the intraday chart.

2. Intraday Chart
   The second factor is the intraday trend, which should align with our moving average strategy. We analyze it within the intraday chart. The third element is the K-line pattern.

3. K-Line
   The K-line trend should be supported by the middle Bollinger Band or meet other criteria, matching the "Testing the Waters" strategy I wrote about yesterday. Thus, the K-line is our third buying condition. Another rule is not to chase highs. If a stock shows signs of hitting the limit-up at opening and cannot be bought in time, avoid chasing it, as its upside potential is limited.

4. Price Increase
   If a stock with high volume ratio appears limit-up in early trading, avoid chasing those with over 6% gains—opt for stocks with less than 5% increase to ensure room for further growth. Buying at +6% leaves little profit margin.

5. Turnover Rate
   Select stocks with a turnover rate above 5%, ideally over 7%. Low-turnover stocks are temporarily disregarded. While limit-ups can still occur, the probability is lower with low turnover.

The five-step method is simple and efficient once mastered, but real-time market trends must also be considered.

Market Outlook & Trading Suggestions

1. If a stock hits the limit-up without significant turnover expansion, it will likely continue rising the next day—hold.

2. If a stock hits the limit-up with high turnover, consider selling during the next day’s rally (if gains exceed 6%) for short-term profits.

3. If a stock doesn’t limit up and turnover remains low, observe the next day’s opening volume ratio. If it fits the five-step method, hold; otherwise, switch stocks.

4. If a stock doesn’t limit up but turnover surges, monitor the next day’s volume ratio. If criteria are met, hold; otherwise, sell during a potential +6% rally and reinvest.
   
   

Stock trading is not gambling—without skill, losses are inevitable. Surviving this market is tough. There are no bad markets, only bad strategies. Every fluctuation is a capital feast and the best investment opportunity.