K-line is the most basic expression symbol of market movement. It carries the flow track of money and records the process of money gain and loss. It is endowed with life by people, showing people's expectations, suspicions, fantasies, greed, fear, etc., and contains rich natural laws.
1. You better believe it
One leaf falls and the world knows the autumn. This is the way of thinking brought to us by the K-line chart. It clearly reminds us that no matter how large the market movement is, it develops from clues. Who can first grasp these more accurately? Whoever has clues can avoid more losses and obtain the greatest benefits.
Every K-line chart is trying to make gestures to you, telling you the changes that are taking place in the market, and you can only understand the rhythm in the noisy market if you calm down and identify carefully.
The development and success or failure of all things seem to be without a clue, but in essence they are all governed by internal laws, and the K-line chart is no exception.
Here, there is nothing but people. You have to use this chart to identify market participants' guesses, wishes, understanding of supply and demand, relative strength of buying and selling, etc.
Like the magical banknotes, the K-line chart, which is being followed by hundreds of millions of people around the world, also really affects people's transactions and gains and losses. You have to believe it because hundreds of millions of people are reading it, using it, and trying to manipulate it. K-line movement is better than eloquence, better than forecast, better than appearance and rumors.
But facing the same picture, Easterners like to use philosophical methods to grasp it, while Westerners like the results of quantitative statistics, but no matter how scientific statistical tools are, it is difficult to count the psychological changes in the speculative world. If there is too much reliance on computerized analysis systems where anyone can trade based on buy and sell signals, then speculation will be reduced to a video game and the trader's brain will quickly depreciate.
2. One method per person
K-line charts are not a science, but a practice of behavioral art and investment philosophy. It is essentially a concentrated reflection of the psychological factors of market groups. You can grasp its sex, but not its magnitude, and it leaves a lot of subjective judgment for everyone, leading analysts who try to quantify it to end up astray.
This is a world that statistics cannot understand. Reason is often the worst enemy here. There are no hard and fast things here, only rough lessons learned.
Just as there is no perfect transaction, there is no perfect graph in the candlestick chart. When analyzing graphics, you should not stick to the graphics, but should study its inner essence to gain insight into the changes in the power balance between long and short.
The analysis of the K-line chart has a strong subjective color, which leads to the fact that after everyone has completed the same course, even if they are all market doctors, they can diagnose the market through the K-line chart and put it into practice. and results are different.
This one depends on the individual's character, the second depends on the individual's perception, the third depends on the personal experience, the fourth depends on his market philosophy, the fifth depends on his perception of risk, and the sixth depends on His consideration of income, seven depends on the influence of the surrounding environment on him, eight depends on the characteristics of the market he trades, and nine depends on the size of his funds.
Western technical analysis pays attention to scientific rigor, while eastern technical analysis pays attention to dialectical thinking. Combining the advantages of both, the best trading method is: keep a close eye on your losses and let the profits run by themselves. Therefore, even if one person has one dharma, all dharmas will return to the clan in the end.
3. Concentration of natural law
Nature has a law of inertia, which states that an object will move in the direction of a force unless it is affected by a new force.
The same is true for the market. At the beginning, economic data, news, speculation, etc. have contributed to a market, and the K-line chart will develop along the force of these factors; once internal and external factors change, the price will reverse until a new The balancing force arrives.
There is a law of acceleration in nature, that is, an object needs external force to do work when it goes up, but it will accelerate due to its own weight when going down. The same is true for the market. A rise will consume a large number of buy orders and increase the trading volume sharply, while a fall can be a sharp and infinite fall. This shows that it is easy to be short and difficult to do more, and it also reflects the inevitable law of the stock market.
There is a law of reaction in nature, that is, the action of force is reciprocal. The same is true in the market. It is commodity and stock prices that affect market psychology, making people fearful or greedy; in turn, market psychology affects prices, causing them to rise or fall. There is no question of which came first, the chicken or the egg, and the counterforce always exists.
There is also Newton's fourth law in nature, that is, increasing motion decreases reward. The same is true in the market, frequent short-term transactions will continue to consume funds and reduce the total return of traders.
There is also the law of energy conservation in nature, that is, any kind of energy will be transformed into another kind of energy with the passage of time. The same is true in the market. The energy of long and short can be switched at any time, and the phenomenon of how long the horizontal is and how high the vertical is is not uncommon.
There is also the law of yin and yang in nature, namely: old yin gives birth to little yang, little yang becomes old yang, old yang gives birth to little yin, little yin becomes old yin, old yin regenerates little yang; There is yang in yin, and yin in yang, and yin and yang are transformed, and life is endless.
The same is true in the market. Sooner or later, the bulls will sell and become shorts, and the shorts will become longs sooner or later after withdrawing their funds; when the bulls die, the shorts are born; There is a demand for partial rebound, and there is a requirement for short-term adjustments in the rising environment.
In K-line sports, there is neither the best shape nor the worst shape. The same shape will have different meanings and forecasts when placed on different occasions or times. There is no absolute success here, and no guaranteed failure.
When the graphic prediction fails, it is often an opportunity for you to backhand the order; and when the graphic prediction succeeds, often one of your feet has stepped into the door of loss.
Misfortunes depend on blessings, and blessings lie on disasters. When analyzing K-line charts, one must analyze the same source of information from both optimistic and pessimistic aspects. In many cases, even though they wear the same coat, the gestures of the market are different.
Therefore, in the face of each K-line, we might as well always ask these two questions: If the market is really bullish, why don't the bulls...? If the market is really bearish, why don't the bears...? In this way, the mystery suddenly appeared.
4. The embodiment of dialecticsEverything is relative, without relative, there would be no yin and yang, long and short, fast and slow, rising and falling, etc.; everything is moving, there is no absolute isolation, only relative movement, and solving problems in movement Methods;
Everything is contradictory, there is me in the enemy, there is an enemy in me, the enemy is indistinguishable from us, only contradiction is the real order; everything is convertible, yin and yang can be converted, energy can be converted, time and space can be converted, if you stick to one side, It's like carving a boat and asking for a sword.
For the K-line, from a micro perspective, it is necessary to grasp the meaning contained in her itself. For example: the longer the Yang line entity is, the more favorable it is to rise; the longer the Yin line entity is, the more favorable it is to fall; but after a continuous strong rise, beware of the peak and then decline; after a continuous strong decline, it may be extremely prosperous; if the shadow line is relative to the entity Very small, can be equated to nothing;
The longer the shadow line pointing in one direction, the more unfavorable it is for the market price to change in this direction in the future; the upper and lower shadow lines are long at the same time, indicating that the long and short sides are fighting fiercely, and the final balance is flat, and the market outlook is uncertain; the appearance of the doji is often a transitional signal rather than a Reversal signal, which means that the market has temporarily lost its sense of direction, etc.
From a macro perspective, it is necessary to know how to grasp the working law of the K-line chart as a whole. For example, the reliability of the monthly K-line is higher than that of the weekly K-line, the reliability of the weekly K-line is higher than that of the daily K-line, and the reliability of the daily K-line is higher than that of the hourly K-line;
For another example, for two or more K-lines, the most important thing is their relative positions, and different positions mean different price ranges. The second is their appearance, that is, whether they are hatched or not, how long or short, etc.
The last is their color, that is, whether it is a Yin line or a Yang line; in addition, the trend trajectory before the formation of the price pattern is the key to deciphering the later trend. Ups and downs, fast and slow, big and small, etc. are all relative to the past In terms of trends, only by comparing the past can we know the future.
5. neither sad nor happy
For traders who use candlestick charts to analyze and enter the market accordingly, there are three things to understand:
First, you may never see the standard K-line patterns drawn in books, so you must grasp the degree of recognition;
Second, what is technically feasible may not be possible in actual price movements. For example, if the price gaps and opens low, your stop loss point will be left behind, making your stop loss technique invalid;
Third, the market is a self-healing and self-mutating thing. Because the people participating in the market become smarter, it becomes smarter, and the tried-and-true methods may become invalid.
The K-line chart itself is neither good nor bad, it will not make you profit or loss, it is your ability to identify and operating rules that make your funds fluctuate. For those traders who lost money, the root cause came from their wrong analysis of the market, or their lack of ability to translate correct analysis results into actual operations.
For example, on the K-line chart, what price is the most important? People's answer is often: the buying price. Because you participated in this matter, you pay close attention to this price, and when you lose money, you will look everywhere for the reason for the loss, or collect evidence from the same pile of information sources to continue to hold.
But the wind is still the wind, and the fan is still the fan. Excessive care and enthusiasm expose your desire, greed and fear, and this is the reason why you cannot turn the correct analysis results into profits.
Success is often the result of trading as planned. The wealth of Buffett and Soros is not earned, but the product of the correct implementation of their ideas and strategies. Their whole life is to constantly verify their ideas and strategies. Therefore, only when you change your investment behavior into the behavior of doing your homework, and strictly follow the correct plan to trade, will the mentality of worrying about gains and losses and the situation of being deceived will change.
6. Price/Quantity/Time
Japanese traders have a famous saying: the first hour of trading leads to a trading day. It can be seen that the opening quotation often lays the foundation for the trading quotation of the day.
The opening price is the result of people's deliberation overnight, and it is also the process of continuing to confirm or revise yesterday's price, and it is also the establishment of today's new price or the beginning of a tentative attack.
As for the closing price, because most of the methods of western technical analysis, including how much margin to add, are based on the closing price, so when the closing price is approaching, the long and short sides will often carry out violent attacks and make a clear-cut statement. take one's stand
At the same time, those automatic trading computer systems often judge whether certain patterns are established according to the price before the closing, and accordingly conduct a large number of transactions before the closing.
Here, price is a commodity, and the whole market transaction is a process of discovering the value of price. When people think it's cheap, they buy a lot, and the price goes up; when people don't think it's worth that price, they stop buying, and the price goes down.
People's value judgment standards are influenced by market sentiment, and fluctuate around the price value, artificially pulling up or pushing down the value.
If price can tell us what is happening in the market, then volume can tell us how it happened, it represents market sentiment and supply and demand.
Any price and trading volume are relative to a certain time. In a given period of time, the trading psychology of the market will not be the same. Trading volume is the result of long and short power consumption, and it is a reflection of the intensity of the long and short game.
Time and price also have a dialectical relationship. The longer the consolidation at the same price, the more likely it is to switch to a higher or lower price; and the more intense the price movement, the longer the silence may be in the future;
The longer the time-consuming exercise, the greater the variable, which often leads to the miscarriage that should have happened, but the impossible has become a reality. This is how the market uses a set of internal mechanisms to restrict price, time and trading volume.
7. Reversal is the most important
As a trader, you must pay attention to all kinds of reversal signals you encounter, even if it is false. The loss of missing a real dangerous signal is sometimes beyond our ability to bear. Our entry or exit only starts when the reversal signal comes.
You can calmly wait for the subsequent verification graphics, or you can trade immediately, but the key is to wait patiently for the reversal signal to appear. Otherwise, if the market consolidates after entering the market, you will lose control of your funds and at the same time, you will suffer a lot in your heart.
Most of the time, the reversal trend is accompanied by a star line or a Yin-Yang line with a long shadow line. These traces have been counterattacked by the short side, and it is not far from success as a loser. .
The essence shows that people are often only interested in success and don't care about failure, but the views of these marketers should not appear on professional traders.
Although the reversal signal heralds a change in the situation, it does not tell people that the trend will turn around soon. It may consolidate sideways or adjust in the opposite direction. Therefore, it is not wise to sell all the underlying stocks after the reversal signal appears.
Reversal signals are often also breakout signals. The main force of the market often uses breakthroughs to test the market reaction in the support zone and the pressure zone, and then launches the next step. Therefore, these test breakthrough actions are often meaningful; Traders' ability to judge, or attract followers as sacrifices.
But whether it is a test breakout or a false breakout, they tend to show their true form at the close or the next trading day. It's just that after a test breakthrough occurs, the main force may continue to test until the real breakthrough comes, while the false breakthrough will immediately reveal the real reverse intention after the deception succeeds or fails.
8. Always follow the trend/stop loss
Faced with the magnificent capital movement and mysterious price changes, no one dares to guarantee their own expectations. For those who survive in the speculative market, the most important survival magic weapon is to follow the trend and stop loss. This is to deal with uncertain factors. the only way. The former is active adaptation and the latter is active defense.
In the trading market, if you cannot actively adapt to the environment, the market will immediately engulf you. Learning to actively adapt to the environment means learning to trade on a plan, not on an expectation.
If you don’t make expectations, you won’t enter the market, so everyone will have expectations, but every expectation may not be realized, so successful traders know to follow the trend and admit mistakes in time.
Mistakes are inevitable, and the truly fatal mistake is to persist in being wrong. If you want to impose your own expectations on the market, the result is often tantamount to blocking the car with your own hands.
You know, the market doesn't care about your thoughts and positions, nor does it care whether you follow her trend, she will just flatten all traders who stand in her way.
Therefore, if you have bullish expectations, you should enter when you are sure that the upward trend has come; if you have bearish expectations, you should sell when you are sure that the downward trend has come; The bull market only buys up, don't easily backhand orders.
Trading is like taking a chestnut from the fire, and all profits come from the return of strictly guarding losses. To abide by the stop loss rule is to save your funds and give you a chance to make a comeback. Homeopathic and stop loss are trading principles that every trader must possess.
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