1、 Circular bottom of trading volume
Special attention should be paid to stocks with bottom trading volume. When the decline of a stock gradually narrows or a gap in price appears, the trading volume usually shrinks extremely, and then the volume increases and the price rises. This is when the stock price rebounds from the bottom.
However, when the trading volume reaches its bottom, people's emotions often also bottom out. As the stock price falls, those who previously made money in the market gradually exit, while new entrants are trapped one by one, resulting in a decreasing willingness to enter. If people's desire to buy stocks is at its lowest, but the stock price no longer drops, it only indicates that the desire to sell stocks is also at its lowest, which is often a characteristic of the bottoming out stage.
Patience is required when selecting stocks, and it takes some time to wait for the stock price to bottom out. A bottom super code that can make you big money should last for more than half a month, preferably several months. How many investors have the patience to watch their stocks remain unchanged in price for several months?
Most investors are unwilling to wait too long at the bottom, and they hope to see the situation clearly before making a decision. Therefore, they often choose to enter the market when the trading volume rapidly increases with the rise of the stock price. The existence of this type of investor has led to a surge in prices after a breakthrough.
In fact, buying at the bottom of the trading volume is truly conservative and safe. People who buy after the market becomes clear may be able to make money. However, first of all, they cannot make big money, they only seize the middle of the market. Secondly, the risks they face are actually relatively high because the price they bought is much higher than the bottom price. When they buy, investors who buy at the bottom are ready to make a profit and exit at any time. Compared to others, it is clear who is active and who is passive.
2、 A general prerequisite for subtle changes in trading volume is that the trading volume must first shrink significantly. Without this, the issue of stock selection cannot be discussed. The decline in trading volume reflects many issues, among which the most crucial one is that the chips have good safety, which means that no one wants to sell the stock anymore, and at the same time, the stock price does not fall. This further indicates that the market's selling pressure is exhausted, and only on this basis can skyrocketing stocks be developed. The matter is simple. People who are willing to work hard will notice subtle changes in trading volume and decisively buy the stock, while those who are unwilling to work hard have no idea that the stock is brewing a huge change. When things became clear and the stock price rose, everyone flocked to try to share a cup of soup. This way, people who were slow to realize rarely made money because when they chased after the stock, those who were early to realize were smiling and accepting their money.
The analysis method of trading volume changes can be applied not only to daily charts, but also to weekly or hourly charts. The key is what kind of graph can be used to analyze and draw conclusions that can only apply to the corresponding time period. For example, the bottom seen on a daily chart is often a medium-term bottom, followed by an uptrend that may last for one to several months, while the bottom on an hourly chart can only support for ten to tens of hours. If you are a true long-term investor, then you should use a weekly chart to analyze, and the bottom of the weekly chart can generally cover a period of one to several years.
3、 Bottom momentum of long-term bull stocks
Trading volume can be said to be the momentum of a stock price. Before a stock skyrockets, it often falls or consolidates for a long time. At this time, trading volume shrinks significantly, and then there is continuous amplification or mild increase in trading volume while the stock price rises. A stock with bottom trading amplification is like a rocket that must have sufficient fuel before it can take off. Only with sufficient bottom power can the stock price be pushed to a very high level.
A stock that is likely to rise sharply must have sufficient bottom momentum to push its stock price higher, which is relative to the small amounts in the past. That is to say, when the trading volume of a stock extremely shrinks, continuous trading volume is required to push the stock price higher.
Trading volume is a tool for measuring buying and selling sentiment, and it can confirm the direction of stock prices. Therefore, savvy investors must track stocks with huge trading volumes at the bottom, because when the supply and demand relationship of a stock undergoes significant changes, it will determine the direction of the stock price. Investors must not ignore the relationship between stock price and volume when such changes occur. Once the price and volume match, the stock price will inevitably rise rapidly as expected after intervention.
The change in trading volume pattern will be a precursor to trend reversal. In the early stages of a stock's rise, the relationship between its trading volume and stock price is that the price increases slightly, while the trading volume continues to increase. The stock price also rises with the increase of trading volume. Once it enters the strong upward phase, there is a deviation trend of increasing volume, decreasing price, and decreasing volume, increasing price. Once the stock price falls below the ten day moving average, it indicates that its strength has changed, and it will temporarily end its strength and enter the mid-term consolidation stage.
Therefore, when you hold a strong stock, it is best to closely monitor the daily K-line chart of the stock price. When the daily K-line remains above the 10 day moving average, you can hold it all the way. Once the stock price falls below the 10 day moving average with a long bearish line or market trend, you should immediately sell and consider a stock swap operation.
Special attention should be paid to stocks that have completed consolidation, as the opportunities for such stocks far outweigh the risks. The closing trading volume of consolidation is shrinking, indicating the decline of selling power.
Basically, volume contraction is a signal of reversal. Only with volume contraction can there be a possibility of stopping the decline. During a downward trend, trading volume must gradually decrease in order to have a chance of rebounding. However, after volume contraction, it may shrink even further. When is the bottom? Only when the volume shrinks and then increases can the bottom be confirmed. If the stock price is already above the 10 day moving average at this time, it is even more certain that the upward trend has begun.
So, basically, the perspective we should pay attention to is the increase in volume after volume contraction. Only the increase in volume reflects the change in the supply and demand relationship of the stock, and only the increase in transactions can make the stock have upward momentum at the bottom.
Volume Ratio - The Secret Weapon of Short term Trading
Regardless of the type of stock viewing software, when you search for individual stocks, in addition to the chart, the most important thing is to view the data box on the right side of the screen. It is the area that reflects the real-time trading of individual stocks. Above this area are real-time buying and selling orders, below are transaction details, and in the middle are various dynamic data summarized based on buying and selling orders and transaction details, including current price, average price, increase, opening today, highest, lowest, total volume, current volume, external volume, internal volume, and volume ratio data.
We cannot help but ask, why is such a quantitative indicator displayed in this area? Instead of other instant messaging services? It can be imagined that this is a widely recognized practical trading volume indicator, otherwise one would not have enjoyed such high-end "treatment".
From the definition of the volume ratio indicator, it is the ratio of the average trading volume per minute of the day to the average trading volume per minute of the previous five days. The formula is: (real-time trading volume of the day/cumulative N minutes since opening)/(total volume of the previous five days/1200 minutes). This indicator reflects the difference between the current trading volume of the market and the trading volume of the past five days. The larger the value of this difference, the more active the trading volume of the market. In a sense, it can better reflect the characteristics of the market where the main force is making immediate moves and preparing to launch attacks at any time. Therefore, quantitative data can be said to be the translator of the market language, and it is one of the secret weapons for super short-term market insights into the short-term trends of the main force.
I have always strongly opposed investors using the signals of golden and death crosses on indicator curves as a basis for practical buying and selling in the market. This is using indicators to achieve a state of madness, but I do not know that many technical indicators are written based on subjective feelings and cannot withstand scientific statistical verification. Even for technical indicators that seem to have a high winning rate at present, their success rates will vary greatly under different trend backgrounds.
For example, the data used in the random KDJ indicator is the closing price of the day minus the lowest price within 9 days, then divided by the highest price within 9 days minus the lowest price within 9 days, and then written into the KDJ indicator using a simple moving average function. This indicator does not fully use objective data, but instead extracts the highest and lowest prices within N days, which seriously distorts the actual reflection on the indicator and leads to misleading information. We used it as a conditional stock selection formula to conduct a long test on its success rate, and found that the success rate of earning 10% in each month of the year was less than 50%, which is not even as good as gambling. In addition, technical indicators such as MACD and RSI, which are widely recognized in the market, are difficult to accurately reflect the market, and most investors regard them as treasures. No wonder nine out of ten bets lose.
Unlike the various technical indicators mentioned above, the volume ratio indicator is based on the comparison between the real-time average trading volume per minute and the average trading volume per minute for five consecutive days, rather than randomly selecting the trading volume of a certain day for comparison. Therefore, it can objectively and truthfully reflect the trading fluctuations and their intensity in the market. From the perspective of trading, the volume ratio indicator is directly reflected in the region, which is more convenient and fast than flipping through other technical indicator curve charts.
Mastering the essence and flexibly applying yin-yang line analysis
1、 The analysis of investment psychology shows that the forms of yin-yang lines vary greatly, and it is difficult for investors to fully grasp them. There is no need to memorize them, because although the forms of yin-yang lines are different, their essence is the same. That is to say, as long as you master the basic methods of analyzing the morphology of yin-yang lines, you can integrate and connect all yin-yang line morphologies. Stock trading is a game between long and short sides. In the process of stock trading, the most intuitive information we see is the fluctuation of stock prices, which is the result of the balance of power between long and short sides. It reflects the psychological changes of both trading parties. So, by analyzing investors' investment psychology through the surface of stock price fluctuations, we can grasp the changing trends of various bullish and bearish lines.
2、 Learn to restore any yin-yang line shape, no matter how complex it is, we can use its first opening price and last closing price to restore it to a single yin-yang line. If the long and short meanings of the restored yin-yang line are inconsistent with the original yin-yang line form, then the yin-yang line needs to be further confirmed; If the restored yin-yang line can support the yin-yang line morphology, there is no need to confirm. The biggest advantage of form restoration is to simplify complex and difficult to grasp yin-yang lines into a single yin-yang line, making the meaning of long and short clear at a glance. Therefore, by mastering the method of form restoration, investors have a "golden finger" that can analyze and judge any yin-yang line form, even if we have not encountered this form before.
3、 Mastering the essence and flexibly applying the analysis of yin-yang line forms, beginners should avoid two common mistakes: one is not to exaggerate. In the form of yin-yang lines, there are many shapes that are similar. If you are not careful, you will mistake them. To avoid misidentification, it is necessary to repeatedly compare some similar graphics, so that investors can truly understand their differences. Compared to the shape of three candlesticks, but due to the changes in the physical form of the candlesticks, there will be three forms: Three White Soldiers, Enemy Current, and Step by Step Camp. Their respective technical meanings are different, and the corresponding methods of operation are also different. The second is not to know it but not to know the reason behind it. Many yin-yang lines have different meanings due to their different positions. Investors must pay attention to this. Taking the big bullish candlestick as an example, many people believe that any big bullish candlestick is a signal of an increase. However, this understanding is not comprehensive. When the stock price rises rapidly and pulls out a big bullish candlestick, it often indicates a peak, and it is not a buying signal. Therefore, investors need to carefully analyze and judge the characteristics and technical meanings of the bullish and bearish candlesticks, knowing both the first and second aspects, so as not to make mistakes when applying them.
4、 It is difficult to make a definite judgment on the stock price trend based on a single yin-yang line before and after comprehensive analysis. The role of analyzing the morphology of yin-yang lines is sometimes limited because many reconstructed yin-yang lines cannot support their original meaning. In this case, it is often necessary to make a comprehensive judgment based on the situation of the yin-yang lines before and after. Generally speaking, the power of the market itself is difficult to change the strong trend of a stock price, and occasional unexpected factors can only cause temporary fluctuations in the established trend. That is to say, the form of the yin-yang line always follows the arrangement of the yin-yang line. Even if there are occasional opposite yin-yang line forms in the yin-yang line arrangement, we should consider it from the perspective of the yin-yang line arrangement, rather than being limited to short-term yin-yang line forms. So in a given trend, the directional effect of the yin-yang line shape is actually very limited. This requires a comprehensive analysis of the front and back yin-yang lines when analyzing the morphology of the yin-yang line. If there are many other yin-yang lines surrounding the yin-yang line shape that support its meaning, then the effectiveness of this yin-yang line shape, like other technical analysis methods, is not absolute or omnipotent. For example, when the stock price rises to a certain extent, its bullish and bearish candlestick patterns echo back and forth, and there are repeated reversal signals, indicating that the stock price is not far from the top and should leave decisively.
5、 Combining with other analytical tools, just like other technical analysis methods, the analysis of yin-yang line morphology is not absolute or omnipotent. From a statistical perspective, although some yin-yang line forms have relatively high effectiveness, such as the "Morning Star" form, with the gradual popularization of yin-yang line form analysis methods and the increasing dependence of investors on yin-yang line form analysis, the effectiveness of these forms will be greatly reduced; However, some forms have relatively low effectiveness and cannot directly guide actual investment. Therefore, the analysis of yin-yang line forms needs to be combined with other technical analysis methods to realize its value. In fact, using the yin-yang line to deceive investors, suppress fundraising, or secretly distribute funds is a consistent tactic used by market makers to manipulate stock prices. In this situation, if investors rely solely on the bullish and bearish candlestick patterns to make investment judgments, they are likely to fall into the trap of market makers. To ensure the accuracy of the analysis, investors can combine the analysis of bullish and bearish candlestick patterns with the analysis of the company's fundamentals, technical indicators, and trading volume. If the company's fundamentals, technical indicators, and trading volume all support its bullish and bearish candlestick pattern, its effectiveness will be greatly improved.
A Brief Discussion on the Core Skills and Principles that Stock Investors Must Master
Method: No matter what advanced theories are summarized and induced, they belong to the category of skills. The purpose is to simply solve the problem of buying and selling in and out of the market in transactions. It is established based on practical experience or inspiration from natural life in the discipline. It is a quantitative benchmark signal for trading in and out of the market
The role of establishing methods: transitioning from disorder to order. Traders before establishing methods are in a blind and disordered state every time they trade. The methods themselves do not bring stable and sustainable wealth, just like crossing the pedestrian crossing in human life. You only know how to walk the pedestrian crossing and cannot deal with drunk driving. This is also the flaw of the methods
This requires principles to make up for it
Principle: This is the protector of money accounts, which is detached from technical skills. Its core idea comes from the flaws in the human nature of trading individuals and blind spots in the use of technical tools
The purpose of establishing principles is to supplement the trading method itself
Protecting principal and controlling risks: Protecting principal, Article 2: Protecting profits
Large scale trading technique: 60 minute short-term wave tactics
Professional investors generally conduct regular analysis of the overall market (individual stocks) when conducting operations, following the principles of (from far to near, looking long to short, small cycles obeying large cycles, large forms affecting small graphs): for example, the preferred monthly level status is the weekly level status, and the minimum requirement is the daily level status. The 60 minute, 30 minute, and 15 minute forms are only intervention points and do not provide a basis for regular analysis. But if investors engage in short-term or even ultra short term trading, they have to pay attention to the technical forms of 60 minute, 30 minute, and 15 minute charts. Among them, the 60 minute chart combines stability and speed, and is a short-term technical chart that connects the past and the future. The following are some experiences of the author in using the 60 minute chart to operate short-term, hoping to be helpful to stock investors.
1. After a complete sub wave adjustment, the MACD showed a bottom divergence as the price fell from the stage high. The iconic K-line appears in the K combination. At this point, the status of the EXPMA indicator should be observed. The author usually sets the fast line time parameter to 12 and the slow line time parameter to 50 for this indicator. This indicator belongs to the trend indicator category, and the mutual movement relationship between the stock price, fast line, and slow line can be intuitively seen from the indicator. Its usage method is similar to that of the moving average system. This indicator has a high success rate in the long market, reaching over 85%. However, when applying this indicator in the short market, attention should be paid to preventing the long trap, as its reaction speed is slow and the success rate is about 65%., This indicator is used for short-term stock selection and intervention, and has high reference value. In the 60 minute chart, the frequent fluctuations of the KDJ indicator will be corrected. When the stock price rises from the 10 hour line, the first wave of attack will be initiated at the 10 hour line price. After the stock price crosses the 10 hour line (the first wave is completed), KDJ will make a golden cross, but it is not a good entry point. The main force will launch a brief pullback and shake up the position. As long as the stock price no longer breaks the 10 hour line and the EXPMA indicator is bullish, there is an opportunity to increase positions during the trading session. Even if the main force's aggressive shake up will break down the 10 hour line, MACD will still rise or rebound without a cross (2 waves). As long as the stock price quickly rises and breaks through the 10 hour line again with volume, all funds should be concentrated to launch a total attack to encircle the market makers and launch a full position battle.
2. After the stock price crosses the l0 line, the upward trend will quickly unfold. The steeper the angle of the 10 hour line, the stronger the strength of the stock price rise. The red bar of MACD shows a high peak (3 waves), and funds with large positions and lucrative profits can withdraw tactically and not participate in adjustments when the red bar of MACD shortens and KDJ shows a high dead cross.
3. The stock price is not far above the 10 hour line and is approaching the 10 hour line downwards. At this time, whether it is platform consolidation or unilateral decline, as long as there is no peak divergence in MACD (4 waves, pay attention to the timing of 2 waves and 4 waves, and the exchange of forms), it should be priced at the upper level of the 10 hour line and surrounded by early exit funds. The final uptrend will end when there is a rapid increase in trading volume (attracted by market makers hitting and following the trend) on the upper iconic K-line, or a long upper shadow line, or a long bearish line, and the stock price rises while the MACD peak is lower than the previous peak (top divergence). The EXPMA indicator will show a dead cross, thus completing 5 waves. At this moment, if the K-line combination reaches the highest price of the second K-line, which is lower than the highest price of the previous K-line, the red bar of MACD will shorten for the first time. Immediately place orders at buy three or lower prices, clear positions, and withdraw from the battle. Remember not to place orders while selling, otherwise profits will rapidly decline.
4. When the stock price drops below the 10 hour line for the first time at a high level, it is absolutely not advisable to buy the stock, otherwise, you will be trapped until the end of time. The decline is slow, and time is long. If you buy or hold it, your mood at the moment is one of frowning but worrying.
5. After resting, you can open up new battlefields. There are opportunities in the market every day. As long as you don't have a lucky mentality and rely on practical skills, you can accurately grasp every opportunity. Hard work equals great harvest. The Chinese stock market is the main battlefield for our capital accumulation, where you can earn endless money.
6. The running trend of each wave on the 60 minute chart and the 15 minute time structure will be perfectly discussed, and the MACD indicator, EXPMA indicator, and KDJ indicator combined will tell you when to enter and exit. If you are knocked unconscious by the waves, it only means that your kung fu is not up to par.
