The classic motto of technical analysis is' quantity comes first '. The change in trading volume will eventually be reflected in the stock price. Finding dark horses based on changes in trading volume is the first thing every investor will notice. But in practical application, it is not easy to dispel the heavy fog and see the true essence.
If the main force is determined to attract funds, then a significant increase in volume during the rise and a sharp decrease in volume during the fall will become the main theme of the trading volume changes during the establishment stage. Although in many cases, the main force's fundraising actions may be relatively covert, and the regularity of trading volume changes is not obvious, it is also not elusive. One important method is to observe the average trading volume. If the trading volume frequently fluctuates around the moving average, and the trading volume exceeds the moving average more when the stock price rises, while the trading volume is lower than the moving average more when the stock price falls, then the stock should be closely monitored.
It should be noted that when investors search for "dark horses" from changes in trading volume, they must analyze them in conjunction with changes in stock prices. Because the vast majority of stocks have some large investors, their short-term inflows and outflows can also cause fluctuations in trading volume. The key is to distinguish the volatility caused by random buying and selling from the volatility caused by intentional absorption by the main force. We know that random fluctuations do not have the problem of deliberately suppressing stock prices. When trading volume is released, stock prices are prone to jump upwards, and the main force of fundraising must lower the buying price. Therefore, there is a certain continuity in the rise of stock prices and trading volume. According to this principle, a certain connection can be established between changes in trading volume and fluctuations in stock prices, and technical means can be used to filter out the jumping trading volume amplification of stock prices and understand the true concentration of chips. At present, there are various popular analysis indicators on the market, but generally speaking, the narrower the scope of use of these indicators, the better the effect, because once they spread, they are easily manipulated by the main force against technology. However, the above principle is always applicable, because no matter how the main force tries to conceal it, concentrating chips is the fundamental goal.
The accumulation of trading volume is another important observation object, which plays an important role in determining the cost of building a main position. Except for newly listed stocks, most stocks have a dense trading area, and breaking through this area requires a lot of energy, making it an important area for the main force to build positions. Often, a large number of chips can be collected at a relatively low cost here. So, stocks that have just broken through important historical lock up zones and accumulated trading volume in the following areas to reach new historical highs are very worth paying attention to, because they indicate that the strength of new entrants is far greater than before, and their warehousing costs are also higher. If there is not much room for future development, large funds will not easily release the funds on the market. But if the accumulated trading volume is not large, that is, the so-called "easy topping", it is necessary to be vigilant, because this is often done by the original main force, and due to the large accumulation of chips, it is relatively easy to pull up. Although this does not necessarily mean that the stock price cannot reach a new high, there is no doubt that the cost of the main force is lower than it appears on the surface. Therefore, more attention should be paid to risk control when operating, especially when the overall trend of the stock market is weakening. It should be pointed out that after the main force starts to build a position, the denser the trading volume in a certain area, the closer the cost of building a position for the main force is to this area, because both real buying and main force trading require costs. The dense trading area is also the most important cost area for the main force. The higher the accumulated trading volume and turnover rate, the more abundant the main force's chip accumulation will be, and often the strength will be strong. Once the time is ripe, such stocks often have the potential to make a splash and become a "super dark horse".
