The above article describes our logic for building positions during bull-bear market transitions, as well as the basis for judging a bull market.
The most important sign to determine whether the current market is in a bull market is liquidity. Lack of liquidity will definitely not support a bull market.
Liquidity is not only the basis for judging a bull market, but also the basis for us to escape the top. In the early stage of a bull market, the liquidity problem can be solved by pulling up the market; in the early and middle stages of a bear market, if there is a lack of liquidity, it is also a sign for us to escape the top (which will be explained in detail later); it is also the premise of our technical analysis.
So what is liquidity? My understanding is that liquidity is the amount of liquid money. Illiquid money cannot be called liquidity. To a certain extent, the concept of liquidity includes depth, but liquidity cannot be expressed by depth. In special cases, liquidity can be similar to depth. For example, the depth of Big Cake and Second Cake is basically equivalent to the market liquidity. The depth of other cottages cannot represent liquidity. At the same time, the depth of a basket of cottages can also represent liquidity.
In short, the indicators for judging liquidity need to be representative of the market and cannot be simply generalized from the sample to the population. It can be understood that the sample is the indicator for judging liquidity, and the population is the liquidity of the market. The sample can only be generalized to the population if the sample is representative.
So how do you judge liquidity?
The first is market turnover. A high market turnover is a sufficient but not necessary condition for good liquidity, that is, good liquidity; market turnover must be high, but a high market turnover does not necessarily mean good liquidity. For example, if the market is affected by favorable factors and short-term volatility increases, the market turnover will be artificially high in the short term. If the market liquidity does not improve substantially, the market turnover will shrink rapidly after a period of time. If the turnover can remain high for a long time, it can be considered that liquidity has improved.
The second is the depth of the Bitcoin 100 market. That is, the total number of orders for Bitcoin plus or minus 100. To understand this indicator, you need to understand the significance of market makers. In order to prevent drastic market fluctuations, market makers need to place limit orders at different prices. The more orders there are in the 100 market, the more funds are invested in the market, or the more market makers there are. (The depth of a basket of cottage industries)
The third is the volatility of the entire market. Usually, long-term volatility is large and liquidity is good.
Fourth, the persistence of the copycat pull-up. The higher the persistence, the better the depth.
Fifth, the frequency of Bitcoin’s plug-ins. A high frequency of plug-ins is usually a sign of a lack of liquidity or an impending lack of liquidity.
Liquidity cannot be judged by a single indicator. Multiple indicators and multi-dimensional judgments are needed. The indicators I often use are usually transaction volume and depth to judge liquidity. The last three indicators are empirical indicators.
The next issue will share the simplest way to learn the most practical technical analysis indicators #带你看看币安Launchpad #BTC #流动性
