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● **”Profit Soars, Loss Plunges”**

Cut Losses Short, Let Profits Run – Practical Investment Strategies, The Power of Account Segregation, and a Complete Guide to Trend Following Know-How

This article covers account segregation, value investing vs. trend following, and even system trading – the investment strategies that real-world investors are truly curious about. It’s a compilation of valuable, practical tips including real money-making investment principles, the fundamental segregation of accounts, combining trend following and value investing, strategies for maximizing returns, and the core of trading (win rate, risk-reward ratio, risk management). It naturally incorporates the distinctions and integration of various investment/trading strategies, as well as the best SEO keywords for economic blogs.
With this single article, you can grasp everything from investment market trends to practical application tips, investment psychology, and investment systems.

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1. Systematic Classification and Performance of Investment Strategies

• Subdivision of Investment Methods: Value Investing, Trend Following, System Trading
• The Need for Individual Account Segregation: Why divide accounts by strategy? In practice, mixing various strategies in a single account undermines principles. Since investment behavior becomes erratic, separating accounts by strategy can capture both return and risk.
• Looking at real-world cases over the past 20 years, the performance differences between strategies are clear depending on the market atmosphere, such as bull or bear markets.
  • Value investing yields high returns in the long term, while trend following strategies have also been strong since the COVID-19 pandemic.
• Sharing experiences of integrating trend following, trading, and value investing strategies.
• Account segregation has a self-partitioning effect, preventing emotional sway and enabling adherence to practical principles.
• Know-how on segregating value investing accounts / trend following accounts / system trading accounts.

2. Value Investing – Fortifying the Basics of Investment

• The ultimate base of stock investment is value investing.
• Maximizing ‘shareholder value’ such as good companies, undervalued stocks, and compounding and dividends from long-term holding.
• Stock Selection Tips:
  • Stocks without analyst reports or news may have a higher potential for undervaluation (discovering market blind spots).
  • When checking performance, avoid over-immersion in short-term HS CODE and other statistical data (meaning look at the big picture).
  • Be wary of sudden changes/activations of IR (Investor Relations, corporate briefings) (potential issues such as fundraising).
  • Profit margins (ROE, OPM) pose risks if too high or problems if too low; prioritize companies with structural growth foundations.
• Meticulous dollar-cost averaging, avoid averaging down. No ‘psychological averaging down’ except for planned additional purchases.
• Occasionally, dollar-cost averaging timing is only when there are external adversities and impeccable corporate fundamentals.

3. Trend Following – Maximizing Profits and Response Strategies

• What is Trend Following? Jumping on the bandwagon. Entering a stock’s upward trend and selling when the trend reverses.
• Maximized returns after segregating value investing and trend following accounts.
• The key is value and fundamental review, then selling some up to fair value, after which maximizing the remaining portion with a trend-following strategy (the principle that ‘the beer foam is the best part’).
• Considering the fair value standard based on investment psychology and the timing of real-world profit realization – securing overshooting profits by integrating the trend-following strategy.
• Trend following requires strict adherence to principles without mixing accounts or stocks. Rather than a valuation concept, the rule is to “only look at the trend.”
• Why trend following integration works well: If transitioning from value investing → trend following, a large additional profit section is secured.

4. New Investor Trend – Techno Fundamentalist

• The recent investment trend is integrating ‘technical analysis + fundamental analysis’: checking charts + fundamentals simultaneously.
• Not the past short-term trading that only looked at charts, but a fusion method of discovering growth stocks and then entering purchases based on technical patterns.
• William O'Neil's CAN SLIM model, Mark Minervini's trends, emphasizing real-world experience – the investment pattern that Kkangto aims for.

5. System Trading – Finding the Answer in Automation

• System Trading: Algorithm-based automated trading. Setting rules and reflecting real-time market data.
• Based on backtesting results, the account MDD (Maximum Draw Down) is the standard for changing strategies.
• Individual investors these days, even non-experts who don’t know coding, can fully challenge this with AI/no-code tools.
• The more you set rules and leave it alone without emotional involvement, the more you adhere to the principles.

6. Practical Principles of Maximizing Profits – Trading’s Three Principles

• 1. Win Rate: The win rate doesn’t need to be high; maintaining just 30% is sufficient.
• 2. Risk-Reward Ratio: “Cut losses short, let profits run” – a structure where if you lose ₩1 million at once, you make ₩3 million when you profit (risk-reward ratio of 1:3 or higher).
• 3. Risk Management: Max 2% Rule – Absolutely no losses of more than 2% of the account per trade!
• If you adhere to these three elements, you can complete a structure that can trend upward with emotional exclusion and mathematical probability.
• Even beginners can reach win rate goals with repeated practice/algorithm utilization.

7. Investment and Financial Psychology – Emotions Determine Investment Success or Failure

• ‘Psychological pain’ from investment losses is greater than the joy of profit. So, postponing cutting losses and repeating the error of early profit realization.
• Emotional exclusion, systematic principles, and automated systems are the fundamental solution.

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< Summary >

• Segregate accounts by investment law (value investing, trend following, system trading), and high returns/low risk are possible by systematically applying win rates and strategy characteristics without emotional involvement when applying each method in real-world practice.
• Solidify the basics with value investing, and maximize profits when integrating the trend-following strategy. The era where system trading/automated trading is possible with AI tools.
• The key to trading is to carefully adhere to the risk-reward ratio, win rate, and risk (2% rule). Applying a mixed practical strategy in line with investment psychology and economic trend changes can lead to mid- to long-term excess returns.

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[Related Posts…]

• First Half of 2024 Investment Trends – Value Stocks, Growth Stocks, and AI Themes
• Practical Trading Strategies – How to Make Profits with a 30% Win Rate

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