There are two types of consolidation: one is to keep building positions (high-level platforms), and the other is to spread prices. Here we mainly introduce the latter type.
Consolidation is composed of multiple high and low fluctuations. If done well, one can sell high and buy low each time, but due to the small amplitude, the price difference is minimal; If not grasped well, it will become selling low and buying high, and stocks that fail to sell are often like this.
At the beginning of consolidation, there will be a group of short-term buying orders chasing after it. Once it falls, many of the previous profitable orders will be sold out, and often just this price difference is enough. If it's not enough, you can pull and smash again. With each pull, many short-term trades enter, and with each smash, some profit taking trades sell. When the sideways period reaches a certain length of time, the initial high chasing plate begins to cut meat.
A successful market maker must maintain a certain percentage of their holdings. If their holdings are too high, they become lonely and have to trade volume all day long, which is very painful. So, once a position is established, most market makers will not increase their holdings and will gradually reduce them as the stock price rises. So, for the understanding of sideways trading, it should be to raise the cost of retail investors, reduce selling pressure, and at the same time, if possible, make a price difference.
Zhuang is most afraid of those who can't come out no matter how hard they try. Once entering the period of upward movement, these people will sit in the sedan chair for nothing, taking away a large amount of profits from the market makers. And once they reach the top, they will start running out, and the banker needs to raise funds. Not to mention the tray, they may even be trapped by them. So, on the way up, we must change our methods to get them out. And the market makers are not afraid of short-term traders. Short term traders have a small appetite and are still timid. With a little bit of trickery, they can be washed out.
So, the purpose of consolidation is to allow profit taking to come out and exchange for newly entered short-term funds. Generally, it is to sell first and then buy, so that the market maker remains proactive in terms of funds. Even if they do not do well and buy at a higher price than they sell, they can at least ensure their position and continue to operate. This is similar to paying first and then paying for the goods. The main reason for the sideways trend without a correction is to maintain the confidence of shareholders, as the market makers still need their help to do so; On the other hand, the turnover rate of the highest level sideways is higher, which saves time compared to a pullback; Another issue is that once the stock price drops to a certain extent, the middle line will enter the lower market, and these people are more difficult to deal with than the previous profit taking market.
For observing consolidation, the main focus is on its amplitude and velocity. The characteristics of washing floating chips are that the amplitude is large, the amplitude remains consistent, the speed does not decrease, the trading volume gradually decreases, the sideways trading time is short, and it is rare to see sideways washing chips that have been held for more than a month, because over time, individual investors will hand over all their chips. If the amplitude gradually increases or decreases, or if the speed slows down, be careful because no matter what the banker's purpose is, it is easy to experience a pullback. As for those who have been trading sideways for too long, retail investors will hand over all their chips, which is a failure. Either the banker sees it as a build and continues to speculate, or the banker gives up.
As for how to prevent it from being washed out, there are not many good ways. One is to observe the trading habits of the village; The second is to analyze the expected price of the village. The remaining solution is to sell as much as possible and then find an opportunity to buy it back.
In addition to the successful consolidation of the two types of market makers mentioned above, there are also some situations where they are not wise or fail. Waiting for opportunities for sideways trading is more common, usually with chaotic trends. Although there is no shipping pattern, sometimes there is a sharp decline, and trading volume is also chaotic. However, the overall amplitude is not large, and the average turnover rate is also very low. Such platforms have seen significant increases after breakthroughs.
A platform where the dealer's shipments are unfavorable can be like any of the above. At first, you can see the dealer using various shipping methods, but later the trend becomes particularly chaotic, reflecting the dealer's restless mentality. Then suddenly, at a moment, the stock price surged. It's hard to say for this platform, as risks and returns coexist. Since its launch in February 1997, 0633 has built several such platforms consecutively.
Finally, it is important to be cautious of shipping platforms before reaching the peak. This platform gives people the feeling of selling more and buying less, but the stock price just doesn't fall. Finally, there is a false breakthrough where some stocks can rise by more than 20%. Everyone should pay attention.
