1. Open and cover positions

1. Open a position

There are two meanings of opening a position:

The first level refers to the operation of professional institutions such as fund management companies. Fund management company opening positions refers to a closed period after the issuance of a new fund. Fund managers use this time period to purchase stocks or bonds and other investment objects.
The second layer refers to the buying behavior of ordinary investors. The opening of individual investment positions is the act of subscribing to funds when there is no fund share in the account.

2. Closing positions

Closing a position is an operation of a second purchase, which means that the investor’s original fund’s net value has fallen to the point of making it a loss, and he needs to buy again at a relatively low level to spread the excessively high fund costs.

The only effect of replenishment is to reduce the original holding cost. The advantage is that it does not have to wait for the fund’s net value to rise to the original high price to achieve the purpose of preserving the exit.

2. Position holding and overweight

1. Hold a position

Position holding is the process in which investors keep holding on after buying fund shares.
Positions are divided into passive positions and active positions.

Passive holding refers to the fact that investors’ wishes and holding behavior do not match, but they have to continue to hold fund shares due to certain circumstances. The reasons for passive position holding are firstly that the new fund purchased by investors is still in the closed period, and the redemption operation cannot be carried out according to the agreement, and they can only passively hold the position and wait. The second is that the price of the fund has fallen in the short term, and the net value of the fund has fallen below the psychological expectations of investors, but in order not to cause substantial losses, it has to continue to hold fund shares.
Active holding refers to the process in which investors recognize the current net value of the fund and have higher expectations for the market outlook, and are willing to continue holding.

2. Overweight

Overweight refers to the process of buying the fund again in order to further expand profits based on the constant increase in the net value of the original fund shares. Overweight can be understood as the process of making a second purchase of the original fund.

The difference between overweight and open position:

Overweighting is a second buying behavior when the original fund shares are in a profitable state, and the purpose is to expand absolute returns.
Calling a position is a second purchase behavior when the original fund shares are at a loss. The purpose is to reduce the holding cost of the original fund shares and facilitate the quick settlement of the market outlook.

Three, full and half positions

1. Full warehouse

Full position is the behavior of investors using all the funds in their account to subscribe for fund shares.

Investors carry out full positions, mainly because they have strong expectations for the market outlook of investment products.
The biggest advantage of the full position operation is that if the investor judges and chooses correctly, and the market outlook of the investment product is in line with the original expectation, the investor will maximize the profit.
The disadvantage of full position operation is the opposite of the advantages, that is, if the investor makes a mistake or chooses improperly, the market outlook of the investment product will be contrary to the original expectation, and the investor's account will suffer a larger loss.

2. Half warehouse

Half-position refers to the behavior of investors using only half of the funds in the account to perform operations when subscribing to fund shares. Half-position operation puts risk reduction at the top of investment. The advantage is that investors can keep tactically active at any time. When the market rises, you can expand the results by adding more weight, and when the market falls, you can spread the low cost by covering the position.

Compared with full position operation, half position operation is still a stable and practical investment method. It is recommended that new fund investors start with half position operation.

Four, short position and liquidation

1. Short position

There are two kinds of understanding of short position:

The first type refers to the behavior of investors selling all fund shares in the account. At this time, the account only has funds but no shares.
The second type refers to investors who do not subscribe for or trade fund shares for various reasons.

Timely short positions are beneficial:

The volatility of the financial market is always ups and downs, and temporary short positions can preserve the fruits of victory on the one hand.
Give investors time to calmly analyze and think, make investors more peaceful, reduce the psychological pressure caused by long-term investment, and make adequate preparations for the next stage of investment.

2. Close the position

Short position is a result, that is, there are no fund shares in the account. Closing a position is an operation, and includes two aspects of the operation process, you can either buy first and then sell, or sell first and then buy.

For example: an investor is optimistic about a certain fund, but there is no funds available in the account, so he sells the original fund in the account on the same day, and then uses the obtained funds to buy another fund. Assuming that the net value of the funds bought and sold is the same, on the whole, the total amount of funds in the investor's account has not changed, but the fund holding portfolio has changed.
Selling a fund belongs to an active short position closing operation, while buying a fund belongs to a long position closing operation. No matter what kind of operation, the purpose is the same, that is, to make a profit from the difference. Being able to spot favorable market conditions and close positions in a timely manner is crucial to realizing profit from the difference or avoiding losses in the event of market reversals.

Fund holding terminology