What does the stock long trap mean? How to identify the long trap in stocks? Today, let me give you a detailed introduction!
The long trap is a trap set by bulls, which usually occurs when the index or stock price repeatedly reaches new highs, quickly breaks through the original index zone and reaches a new high point, and then quickly falls below the previous support level, resulting in investors who buy at high levels being severely trapped.
Long position refers to investors who are optimistic about the stock market and expect the stock price to rise, so they buy stocks at low prices and sell them when the stock rises to a certain price to obtain differential returns.
The long trap is a technical form in which market makers manipulate charts using funds, news, or other means to display signals of long positions and entice retail investors to buy.
Three tips for identifying long positions and traps in stock trading
From a technical perspective, the long trap is a technique in which market makers manipulate charts using funds, news, or other means to display signals of long positions and entice retail investors to buy. The long trap often occurs when the market is consolidating and forming a head, and the trading volume has already begun to shrink. However, most investors have not yet given up on the future trend and are unwilling to make a comeback. Therefore, its completion time is relatively long, and it also has the following characteristics:
1、 The formation of a bullish trap in a bullish market often occurs during the mid consolidation process; In a bearish market, it is inevitable to appear in the bullish phase after a major rebound.
2、 The support of the main average price line has a trend of getting closer to the market price, and the original upward angle is gradually easing from steep. This situation implies that as long as there is a long bearish trend in the future, the support system of the moving average will be completely destroyed.
3、 The shrinking period of quantity begins to form, and there is a downward trend in the medium to short term average line, which may even slightly form an M-head trend.
At the same time, when judging a bullish trap, we should consider the overall performance of the market, especially the trading volume. Without the synchronous cooperation of trading volume, we have reason to suspect that this is a bullish trap. When some of the main techniques are very covert, it can be difficult to judge, but there is one key point, which is to be cautious.
Analyze the current holding status of the banker graphically. The process of attracting funds by the banker always tries to be carried out quietly. When the stock price hovers at a relatively low price and the trading volume gradually increases, there is a possibility for market makers to attract funds. The banker repeatedly sells less and buys more until the chips in his hand accumulate to the predetermined target. Sometimes multiple market makers compete to control the market, causing prices to fluctuate up and down during trading in order to absorb chips and reduce holding costs.
If the stock price has been steadily rising, with increased trading volume at high levels and fluctuating prices during trading, the willingness of market makers to sell is already very strong. At this point, if there is a bullish trend in technical indicators and a continuous bullish line is displayed on the K-line chart, investors must be cautious as there may be a 'bullish trap'. Therefore, it is important to observe further changes in the market and not rush to buy stocks.
Leave some time and space to assess changes in indicators. Market makers manipulate the display of technical indicators through funds, news, and other means to conceal their true intentions. Fundamentally, this is against the trend and comes at a high cost. Therefore, the banker can only make a technical indicator of a long position at a time. When investors are looking at the market, they should not only look at the 5-minute and 15 minute lines, but also the daily lines, especially the weekly and monthly lines.
The common "long trap" set by market makers is usually on the daily chart, but we can find selling signals on the weekly chart. In addition, we can also observe the current intentions of the market makers through the trend of trading volume changes in the energy tide OBV line chart. Especially when the sell signal displayed on the OBV chart conflicts with the short-term buy signal on the K-line chart, the conspiracy of the "long trap" can be exposed in broad daylight. Of course, we can also use other technical analysis methods to identify the authenticity of the multi head arrangement.
Specifically, the coping strategies for long short traps are as follows:
It is better to maintain a wait-and-see attitude when consolidating in the middle of the market or in an unconfirmed position, and wait until the support is fixed before taking a long position. Otherwise, once the long trap is established, it must stop losing and sell out after the original trend line breaks, because in a considerable downward trend in the future, the profits from short selling may be enough to compensate for the stop loss of long selling.
