Those who see through are full of vitality everywhere; People who cannot see through are always in trouble. Those who can be let go are always on the road; Those who cannot let go are lost everywhere. Once you have identified it, you must do your best to seize the opportunity that belongs to you. There is an old saying in the stock market: "Technical indicators vary greatly, and trading volume is the real buying and selling." It can be said that the size of trading volume directly indicates the degree of recognition of the technical form of the market at a certain moment by both long and short sides. The importance of trading volume can be seen. Next, let's talk about how to use trading volume.
What is trading volume?
If today's closing price is higher than yesterday's closing price, the trading volume will become a red hollow entity; Otherwise, it becomes a green entity.
MA1, MA2, and MA3 are the M1, M2, and M3 daily moving averages of trading volume, respectively.
Parameters: M1, M2, M3 are generally set to 5 days, 10 days, and 20 days.
How to view stock trading volume
1. When the market continues to rise for a long time and there is a sharp increase in trading volume, but the stock price rises weakly, hovering at a high level and unable to rise significantly further, it indicates that the stock price is fluctuating significantly at a high level, with heavy selling pressure, thus forming a factor for the stock price to fall.
After a continuous decline in stock price, a large trading volume appeared at a low level, but the stock price did not further decline, with only a slight change in price, which is a signal of purchasing. The stock price increases with the increase of trading volume, which is a normal characteristic of the market situation. This quantity increase price increase relationship indicates that the stock price will continue to rise.
2. In a wave of upward trend, the stock price rises with increasing trading volume, breaking through the peak of the previous wave and reaching a new high before continuing to rise. However, the overall trading volume level of the rising stock price in this wave is lower than the trading volume level of the previous wave. If the price breaks through the new high but the volume does not exceed the new level, then the stock price rise in this wave is suspicious and also a potential reversal signal of the stock price trend.
Classic manifestations of the three major trading volumes:
1. Reduced quantity
Shrinking volume refers to the extremely light trading volume in the market, and most people strongly agree with the later trend of the market, with unanimous opinions. Shrinking usually occurs in the middle of a trend, and everyone agrees with the future trend. If there is a decrease in volume, it is necessary to firmly exit and shrink to a certain extent. When starting to increase volume and launch an upward attack, then buy again. Similarly, if there is a situation of rising or shrinking volume, one should firmly buy and wait for profits. If the equivalent upward momentum is weak and there is a huge release, then sell again.
Choosing bull stocks based on trading volume is surprisingly simple, as long as you avoid the traps set by the market makers
2. Volume increase
Volume increase usually occurs at the turning point of market trends, where market forces gradually increase their divergence towards the future market. While some people are firmly bearish on the future market, others are firmly optimistic about it. Some people have sold out their assets, while others are aggressively absorbing. Compared to reducing volume, increasing volume has a significant false element. It is very simple for the main controllers to use their chips to strike and release huge amounts. As long as the intention of the main force is analyzed thoroughly, the plan can be taken into account.
3. Pile quantity
When the main force intends to rise, they often make the trading volume very attractive. Over the past few days or weeks, the trading volume has slowly increased and the price has slowly risen. The trading volume on the K-line chart forms a pile like shape, and the more beautiful the pile, the more likely it is to generate a large market trend. On the contrary, the high pile volume indicates that the main force no longer wants to play and is shipping in large quantities.
Choosing bull stocks based on trading volume is surprisingly simple, as long as you avoid the traps set by the market makers
The pattern when trading volume increases
1. Preparation quantity. It usually occurs at a turning point in the market trend, where the main force prepares for a significant increase in trading volume. Over the past few days or weeks, trading volume has slowly increased, prices have slowly risen, and trading volume has accumulated on the recent K-line chart in a pile that exceeds all previous volume piles. The more beautiful the pile, the more likely it is to generate a large market trend.
2. Washing volume. After preparing, the volume quickly decreased, with the main force rarely selling and uninformed retail investors selling. Transactions became increasingly sluggish, so the volume sharply decreased again.
3. Shocking volume. This situation usually occurs after a market wash, without sudden positive news or overall stability, when the main force has risen but the volume has not broken through the previous high point. Subsequently, the stock price fluctuated with ups and downs, with the main force aiming to shake out undecided holders ahead of the main uptrend.
4. Attack volume. When the main force starts to lift the main uptrend, the trading volume will double or continue to increase until it breaks through the high point of the previous trading volume, and a main uptrend will come head-on.
