The judgment of capital flow plays a crucial role in analyzing the overall trend of the stock market and individual stock operations, but the process of judging capital flow is relatively complex and difficult to grasp. Here are some methods for assessing the flow of funds.

The commonly referred to "hotspots" are actually individual stocks where funds are concentrated, while "sector rotation" is actually the market effect generated by the rotation of fund flows. If funds concentrate on flowing into "hot" stocks, it indicates that hot money has entered the market, and the stocks have the conditions to trigger the market.

The hotspots of capital flow can be observed from the ranking of transaction volume in the two markets: the top 20 to 30 stocks on the daily transaction volume ranking list are the hotspots of capital flow. The focus of observation is whether these stocks have similar characteristics or are concentrated in certain sectors, and whether they occupy the transaction list for a long time (half a day, one day, three days, etc. are directly proportional to the strength of attracting funds). It should be noted that when the trading volume of the market is relatively low, some large cap stocks occupy the top of the trading list, and the volume ratio of these individual stocks is not significantly increased, which indicates that the market sentiment is scattered at this time rather than representing concentrated capital flow.

When observing stock selection, it is necessary to pay attention to the volatility of fund flow. Observing the volatility of fund flow from the rise and fall chart: the entry of large funds (usually institutional investors or main funds) is different from the entry of idle small funds. Large funds are better at discovering investment varieties with upward potential (from the chart, it appears to enter at relatively low levels), while whether idle speculative funds concentrate on entering depends more on whether the overall market situation is good at that time. Therefore, from the perspective of the market, individual stocks in the sector have rotational characteristics, and the overall time for large funds to enter and exit the market is earlier than the average time for small funds to enter and exit.

How to discover that the main force has already taken action? Looking at the price chart: The stocks that initially initiate the market trend (with the highest increase and increased trading volume) often have the most demonstrative effect. If you haven't bought a leading stock, buy a stock that looks like a leader but hasn't risen significantly yet (from the perspective of trend and sector), because funds have rotation, you must remember. The main force only knows how to lift the sedan chair and not how to do liberation work.

In addition, it is important to check whether some of the stocks with the highest decline on the list have experienced an upward trend in the past two days, and whether their trading volume has been relatively high during these two days. If so, it indicates that popularity has been gathered, and the funds following the trend are more determined, which is conducive to the sustained development of the market. Of course, this does not apply to a significant increase followed by a decrease in volume.

The above mentioned are all judgments made when the market is upward. Investors can try applying this judgment method to their own judgment of the downward market.

In practical application: Firstly, the judgment of the turning point of the market by the flow of funds is very important. Will large funds enter the market at a relatively low point and will the market turn? Will large funds emerge from the relative high point, and will the market turn around? The choice of individual stocks, whether to choose hot spot short-term speculation or to use large funds such as ambush to lift the sedan chair, is inseparable from the judgment of capital flow.

So when analyzing the stock market, we must put fund analysis first. Ultimately, no matter when or where, the stock circulation market is always driven by funds in the game.