We all know that every stock has a market maker, and it is because of the dominant control of the market makers that the stock price can explode strongly at critical times, thus leading to a good market trend. Chip distribution is a good indicator to grasp the dynamics of market makers, but in practical operations, many investors do not know the usage of chip distribution. Below, we will explain the skills of chip application and how market makers attract chips to enter the market, so as to grasp the timing of entry.

1、 Composition of chip distribution

1. Chip Column: The chip chart is composed of chips beads of varying lengths, with each horizontal main force representing a price. The length of the column represents the corresponding trading volume for that price, and the longer the column, the more trading volume for that price. If the stock price stays near a certain price for a long time and there are a large number of transactions, the corresponding chips will usually be very dense, forming a small three head pack, which is commonly known as the chip peak.

2. The color of chips: red represents profit taking positions, blue represents trapped positions; The border between red and blue is the current price.

3. Average cost line: The yellow line in the middle is the average cost line of all current market holders, which is the focus of the entire cost distribution.

4. Profit ratio: refers to the proportion of profitable market positions at the current price. The higher the profit ratio, the more people are in a profitable state.

5. Profit taking: The number of profit taking orders at any price.

6. The range between 90% and 70% indicates the price range in which 90% and 70% of the chips in the market are distributed.

7. Concentration: Refers to the density of chips used by the public. The higher the value, the more divergent it is, and vice versa, it is monthly concentration.

8. Chip deviation rate: The distance between the price of profitable chips and the average cost. The price of profitable chips below the average price is negative deviation, and the further away it is, the greater the negative deviation. Above is Zhengguili.

2、 The relationship between chips, trading volume, and K-line trend

1. When the stock price rises for a long time. That is, the process of the stock price rising from the bottom to the top. In the early stages of stock formation at the bottom, most of the chips should be held by retail investors. When the trading volume increases and the main force begins to attract chips, the total regional trading volume must be greater than the chips collected by the main force, which also includes the behavior of individual investors. When the stock price rises and rests multiple times, it will inevitably lead to the accumulation and movement of chips. This can distinguish the ownership of chips.

2. After the stock price reaches the expected space of the main force, the main force begins to distribute. At this point, there are a large number of chips at the bottom that quickly move up. The above two situations are chip transfers between the main force and individual investors.

3. When the stock price falls for a long time. That is, the process of the stock price falling from the top to the bottom. In the late stage of stock formation, most of the chips should be held by retail investors. Due to the relatively small participation of the main force, sometimes in order to accelerate the decline of the stock price, the main force will deliberately suppress the stock price, causing the trading volume to shrink and gradually decline. During the process of decline or rebound, identify several key points of rebound, the trend of long-term average price line has not been changed, seasonal price support has not been formed, and the trading volume during this period is not equal to the top volume. Funds may even take advantage of the rebound to attract long positions and reduce holdings. A bear market is also a long process, and the accumulation and transfer of chips will occur frequently. The accumulation of chips is not sustainable. This situation is generally a transfer of chips between individual investors.

4. The transfer of chips between the main players. This usually occurs when the main force collects chips from the bottom and raises the stock price to their expected level before distributing them, while other main forces believe that the fundamentals and valuation of the stock still have themes and potential to explore, and actively accept offers.

Funds drive away speculative capital. When the fundamentals of stocks show significant positive trends, foundations will invest in these stocks and use various means to make the previously involved speculative capital surrender their chips.

In short, the chip distribution chart shows a midline trend, and in order to grasp the buying and selling points well, it is necessary to use other indicators together. The amplification of trading volume needs to be distinguished whether it is due to the main force attracting or distributing funds, and the contraction of trading volume needs to be distinguished whether it is due to the main force washing out or the behavior of individual investors after the main force distributes funds.

3、 Precautions for the distribution and use of chips

1. The average trading volume is flat, and the number of profitable chips continues to increase. Investors usually have a significant increase after buying.

2. The trading volume forms a circular bottom, and the number of profitable chips gradually increases. Investors can carefully observe and analyze before buying.

3. The increase is significant, and there is no obvious change in the high volume and chip peak. Investors cannot buy at this time.