Stock speculation skills: how to use the K-line gap to find trading opportunities? What are the precautions for technical analysis?
K-line gap gap refers to the fact that there is no trading in the stock price during a period of rapid and large-scale changes. It shows that there is a vacuum area on the stock price trend chart. This area is called "gap", which is also known as short jump. When there is a gap in the stock price, after a few days, or even longer period of change, and then reverse to return to the original gap price, it is called gap closing (also known as short filling). If the gap is not filled quickly, it indicates that the market is likely to continue; if the gap is filled, it indicates that the market is likely to reverse. The gap can be divided into three classical forms.
1. Break through the gap
The breakthrough gap usually occurs after a period of price consolidation area. When the price is sorted out in the transaction intensive area, and the breakthrough occurs, it often appears in the form of a gap, which is the breakthrough gap.
The main reason for breaking through the gap is that during a long period of price consolidation, the price near the neckline continuously appears the selling pressure during the consolidation period, and the selling pressure is continuously digested by the bull force. Finally, at a certain point in time, the selling pressure near the neckline is digested, so the price will jump upward and form a gap under the promotion of demand strength. Because the price breaks through the neckline in the way of short jump, the gap is called a breakthrough gap.
Therefore, from the reasons for the formation of the gap, breaking through the gap has a very important price signal. Breaking through the gap makes the price break through the neckline formally. If this breakthrough is accompanied by a large number, it can be confirmed that the breakthrough is an effective breakthrough, which is a strong buying signal.
As the breakthrough gap is a signal that the price will expand for a period of time, it is usually not filled in a short period of time with a large number of breakthrough gaps. This is because the strength of the gap jump breakthrough has shown stronger information than that of the general band breakthrough. Therefore, it is unlikely that the technical weak pattern of gap filling will occur.
2. Escape gap
Escape gap is also called continuous gap or measurement gap. Its occurrence frequency is low, but it has important technical index significance.
The escape gap mainly occurs in the situation that the price trend shows a straight trend, that is, a rapid rise or fall. At the beginning of the trend, it will be accelerated after the start of the undertaking period, accompanied by a large volume of trading. In this process, the chase often has a wide gap, which represents the success of a large number of hands. In addition, the emergence of this gap also ensures the continuous trend of the main upward segment. Therefore, in terms of the length of the whole trend, the first escape gap reveals the market's view on the future trend, believing that the existing trend will continue and the range will be similar, so as to attract a batch of turnover. Therefore, when the first escape gap appears, the length of the whole trend can be roughly measured. The gap represents the meaning that the trend is only half way through.
In a period of upward or downward trend, there may be two or three escape gaps, which means that the market's passion may extend the market to a greater extent. Then, the midpoint of the first and second gap can be used as the midpoint of the trend trend.
3. Make the best of the gap
The gap represents the end of a trend, a symbol of the exhaustion of trend strength. Generally speaking, short jump gap is the display of market power, especially the gap with volume. However, if there is no follow-up force after the gap occurs and the trend stops, it shows that the gap is the last force of the market, and the market has no energy to maintain the original trend. Therefore, the gap that exhausts the market's kinetic energy in the end implies that the market will be exhausted and the possibility of entering into consolidation or reversal will be greatly increased.
As with the escape gap, exhausting gap also occurs in a rapid rise or fall. However, the exhaustion gap is a sign of prosperity and decline. However, in the rapid rise or fall, it is necessary to distinguish between the run out gap and the escape gap. Since the first gap in a rapid trend must be an escape gap, the simplest way is to take the location of the escape gap as the midpoint of the trend to calculate the length of the whole trend, so as to judge whether the gap occurred in the place is exhausted. Another way to judge is volume, which is likely to be an exhausted gap if there is an unusually large volume (compared to previous price movements) and the width is wider.
If we look at it from the perspective of whether it is filled, the gap will usually be filled soon. The significance of this filling is that the trend is interrupted. As for the follow-up development, it may be in the form of consolidation or reversal.
Problems in technical analysis
Technical analysis is a comprehensive application of statistics and mathematics. It makes statistics on some situations and obtains the probability that may occur in the normal situation, and then guides the investment operation according to the size of the probability.
Stock technical analysis refers to the use of charts to describe the stock market index and the trajectory of a certain trading variety, or through the study of various relevant data, and then using statistical and mathematical methods to find out the behavior patterns with analytical statistical significance, and to judge the market or stock movement trend. Every analysis method has its advantages and disadvantages. Technical analysis also has its disadvantages. When using technical analysis, we should pay attention to the fact that technical analysis of stock price is based on the principle of statistics. Therefore, what it gets is probability, not 100% correct, and there will always be a certain error rate. Some indicators of technical analysis are based on statistics under normal conditions. Therefore, under normal conditions, the accuracy is very high. However, under abnormal conditions, if the normal standard is used, it will be very wrong. In the debate about whether technical analysis can really predict the market, many important thinking methods have been put forward. These thinking methods not only enrich the investment concept, but also have an important impact on the investment community. The limitations of technical analysis are as follows.
1. Analyze the uncertainty of prediction
The application basis of technical analysis is that the stock market should be an efficient market, that is, any information that can affect the price of securities should be made public to investors. But after all, the market is not a fully efficient market, and a lot of information can not be mastered by all investors, which brings uncertainty to technical analysis.
2. The market trend has strong randomness
The trend of stock price has very strong randomness, and these too random trend, through the statistical method forecast itself will not have much significance. Although some people believe that there is a "trend" to be found in the securities market, it must be admitted that, to some extent, the "trend" can be met but not expected, and it is equally difficult to identify the trend as well as the market shock.
3. The prediction method itself has uncertainty
Technical analysis is based on three hypotheses, which are uncertain. For example, according to the assumption that history will repeat itself, if the chart observes 10 times a phenomenon and 7 times b phenomenon on a certain chart, it tends to associate a phenomenon with B phenomenon, and thus produces a corresponding prediction method, which is believed to have a 70% correct rate. However, it is likely that only 40% of the accuracy of this connection is found in other charts, and 70% of the accuracy in the previous chart is purely accidental.
Recognizing the effective role and limitations of technical analysis, investors should treat it more objectively.