Holding 80,000 to earn 3.7 million, all due to 'buying on upward gaps with high volume, clearing positions on downward gaps with high volume.'
Investors in the stock market can be divided into three types: the enlightened, the unaware, and the latecomers.
The first type is the instigator, who buys stocks when the market is sluggish, gradually changing the supply-demand relationship, and quietly sells when the market peaks.
The second type is the practitioner, who buys stocks when the market is doing well and sells them when the trend turns bad.
This type of investor is not common; the third type is the most tragic, who rush in when the market peaks and sell at the lowest point, vividly reflecting human fear and greed.
Greed and fear are human nature; everyone can be greedy and fearful, and these emotions greatly influence investors' sentiments.
Volume expansion:
Volume expansion generally occurs at turning points when the market trend changes, as the divergence of opinions among market participants gradually increases.
While some investors firmly believe the market will decline, others are equally convinced it will rise.
While some investors are selling off, others are significantly absorbing.
However, compared to shrinking volume, the reliability of expansion volume is questionable because this volume can be entirely generated by the main force trading against itself.
As investors, it is essential to learn to analyze by combining different indicators with corresponding price levels. As long as one understands the intentions of the main force, they can respond flexibly.
Buying on upward gaps with high volume, clearing positions on downward gaps with high volume
Buying on upward gaps with high volume
The upward gap in stock price shows strong buying power, while the rapid increase in trading volume indicates that market funds are actively switching hands.
This indicates a strong upward signal.
When the stock price starts to rise significantly after a gap up with high volume, the larger the upward movement, the stronger the short-term bullish signal.
The stock has fallen from a peak of 8.37 yuan, with trading volume shrinking to a very low level, indicating that all market participants are bearish.
A few months later, the stock price shows some improvement and a slight rise, but unfortunately, the good times do not last long, and the stock price quickly declines again. Not long after, the stock price gaps up, and trading volume shows a large increase.
The stock fell into a V-shaped bottom after a previous decline, and soon after, the price gapped up and hit the limit, showing a strong increase. Coupled with the accompanying increase in trading volume, this indicates the market maker's intention to drive up the stock price.
The market maker creates a gap up limit to attract investors' attention, leading to massive gains in the stock price. At this time, investors will reap significant profits by entering after the gap.
The stock price has declined from a high point, and trading volume has not increased but remained at a low level, indicating that there is little buying interest and the market is generally bearish.
After successfully testing the bottom twice, the stock starts to rally, showing a gap up after reaching a certain height, with increased trading volume.
After the stock rises with a gap up and increased volume, a short-term decline appears; originally, this was the market maker's strategy to drive up and wash the stock, allowing investors to buy when a large bullish candle appears after the wash.
Clearing positions on downward gaps with volume:
The downward gap in stock price indicates market weakness, and the gap down is accompanied by a significant increase in trading volume, indicating that the market maker has completed their operations and started to significantly suppress the stock price, having completed their exit plan while a large number of profit takers exit. This is a clear sell signal, and investors should not sell at this time.
The stock price began to fall from a peak of 29.49 yuan, and after a certain decline, it started to consolidate with shrinking volume. Then the stock price gapped down and was accompanied by increased volume.
After a gap down, the stock price shows an increase in trading volume, indicating that profit takers and trapped positions are beginning to panic and flee. Since the stock price has already been declining, the gap down further stimulates investor panic.
The stock price will continue to decline sharply.
Investors who fail to exit in time should clear their positions when the decline slows down.
The stock price peaked at 25.36 yuan, then showed extreme weakness, continuously closing with downward candles and declining in a sloped manner.
The stock price then consolidates at a low level for several days.
After a period of consolidation, the stock price shows a gap down while trading volume increases.
After the stock experiences a gap down, the price continues to slide, and trading volume intermittently increases, showing multiple small bearish stars and small bearish candles.
If investors encounter this situation, they should exit promptly when the stock price's downward trend slows.
Gentle volume expansion
Gentle volume expansion refers to a sudden appearance of a continuous mild volume expansion pattern resembling a 'mountain shape' after a period of sustained low trading volume.
When individual stocks show this situation, it generally indicates that strong funds are intervening. After gentle volume expansion appears at the bottom, the stock price will rise with the volume, and when the volume shrinks, the stock price will adjust appropriately.
After a period of adjustment, the stock price’s rise will gradually accelerate. Investors need to note that when the stock price rises moderately in volume, its adjustment width should not fall below the low point before the volume increase, as if the adjustment goes below the main force's cost zone, it indicates that market selling pressure is still significant, increasing the likelihood of further adjustments.
The intuitive feature of moderate volume expansion is that the connection between the peaks of the volume bars forms a smooth parabolic rise, with sharp inflection points. The turnover rate should be between 3% and 5%.
The reason for gentle volume expansion is that as the accumulation continues, external chips are becoming increasingly scarce, leading to a gradual rise in stock prices. However, since the main force is consciously accumulating, both the stock price and trading volume are kept within a moderate range to avoid attracting market attention.
Increasing volume
1. Pattern characteristics:
After a wave of continuous volume expansion, the volume then shrinks, followed by another continuous expansion, and then shrinks again.
But the volume of the latter wave is greater than that of the former wave, forming increasing volume.
2. Causes of formation:
When the stock price rises and trading volume expands, showing a pattern of rising prices and increasing volume, this indicates that the buying power in the market is greater than the selling power, resulting in the formation of increasing volume.
3. Trading strategy:
When a stock shows a pattern of rising prices and increasing volume, one should take the opportunity to buy during market pullbacks without hesitation. Once the first low point is passed, the same low price will not be available again, so being able to buy is a stroke of luck.
Decreasing volume
1. Pattern characteristics:
The stock price opens lower or flat and then rises, but the trading volume diverges, showing a situation of price increase and volume decrease, where the stock price rises but the trading volume shrinks, with each wave smaller than the last.
After the stock price reaches a daily high, the corresponding trading volume only slightly exceeds the previous wave's volume, indicating that the stock price has reached its peak for the day, leading to a decline. Although there may be a rebound, the trading volume will not exceed the previous high.
2. Causes of formation:
After a continuous rise over several days, the momentum for buying has significantly decreased, especially when encountering previous highs; if decreasing volume appears, it clearly indicates that this wave of increase is coming to an end.
3. Trading strategy:
Once decreasing volume appears, it is a signal for market decline, and holders should quickly take profits.
Those without positions should absolutely avoid buying on dips; otherwise, they will suffer while standing guard at the mountain peak.
Trading against volume
1. Pattern characteristics:
The trading volume shows a sudden and abrupt increase, presenting a single, independent volume bar without continuity; after one volume bar expands, the next immediately shrinks.
2. Causes of formation:
This is a characteristic formed when the main force is trading against itself. The purpose of the main force's trading is to mislead the market based on the stock price's position, using trading against itself to mislead investors who do not understand.
3. Trading strategy:
After seeing a volume spike, the best action is to remain still and let the main force mislead the market while I stay calm.
Choosing support levels for bull stocks
In the stock price rising phase, there are two very obvious support lines, known as upward trend lines. Once the upward trend line is confirmed, a potential explosive bull stock can be identified.
The schematic diagram of support levels shows that the characteristics of a bull stock are that the stock price continues to rise along an upward trend line. This is because bull stocks are always sought after by investors entering the market at different times, thus exhibiting an upward trend, which can be expressed with a trend line, namely the upward trend line.
The upward trend line is formed by an upward straight line. Although it seems simple, judging its effectiveness requires certain skills to effectively identify the upward trend line and thus identify bull stocks.
Every stock price adjustment will show a support point; starting from the upward trend line, the emergence of the second support point is the confirmation of the rising trend line. If only one starting point appears without a support point, it cannot be considered an upward trend line.
Additionally, the number of support points has a close relationship with the upward movement of the stock price.
Stocks with a relatively sharp trend tend to have fewer support points, while those with a smoother trend have more support points.
Stock trading: Who keeps losing money, and who becomes a billionaire?
In China: 85% of stock investors are losing money.
The Chinese stock market has been open for nearly 30 years. According to investigations by relevant authorities, 85% of investors in the Chinese stock market lose money year-round, especially among the following types of people:
1. Specifically buying stocks that appear cheap on the surface, like buying Industrial and Commercial Bank at 8 yuan and leaving them untouched for a long time.
2. Busy with daily affairs, buying stocks and leaving them there, not responding even as they drop; claiming long-term investment, believing they will eventually be freed. (In reality, a significant portion will continue to drop, potentially becoming penny stocks in Hong Kong.) The stock market is a market, not a bank, mind you!
3. Buying 10 different stocks with 200,000 yuan, confidently stating: 'Don't put all your eggs in one basket.' They have no idea that in the Chinese stock market, 7 to 8 out of 10 of those baskets may have holes and are unreliable.
4. The more it falls, the more it adds, the more it adds, the more it loses.
5. Holding on to three stocks that are in a loss, resolutely refusing to cut losses. One stock just started to rise, and then it was sold immediately; unexpectedly, it hit the outer high bridge, with eight or nine consecutive limit-ups, leading to sleepless nights filled with regret. The other two stocks continued to drop deeper, like Pangang Vanadium-Titanium.
6. Not very knowledgeable and very stubborn, not open to the advice of philosophers or friends.
7. After making money by buying stocks once and earning tens of thousands, they think they are lucky and have good fortune; they invest all their savings, even sell their house and borrow money from relatives and friends to trade stocks, only to end up losing everything in a bear market.
8. Very obsessed with pure technical analysis, 'the five-day line crosses the ten-day line, golden cross, jump in, ...'. In the long run, this is often unsuccessful. After leaving the large securities companies for several years, I recently went back in; many old friends are engaged in technical analysis. When asked, they say, 'Teacher Xie, I've gone from 300,000 to 350,000 in these years, without losses.' Alas, how much time has been wasted; it would be better to buy some long-term bonds with an annual return of 6%-7%!
9. Watching stock market programs on television all day, believing the analyses presented. In fact, I know a famous stock commentator who lost 50% of over a hundred million yuan in funds entrusted to him during actual operations. Therefore, I rarely watch such TV programs. Real experts, considering safety, would not come to do programs here.
10. Inquire about news, look for growth stocks and dark horses, study individual stocks, but ordinary people often cannot find good stocks. Otherwise, why would some researchers (most of whom have master's or doctoral degrees) need to earn over 100,000 or 200,000 a year in companies? They might as well borrow some money to trade themselves!
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