[KDJ Indicator-Overbought Strategy] Learn KDJ overbought and oversold in 9 minutes, introductory teaching for beginners, a powerful tool for traders
#交易系统 #交易策略 The overbought zone means that when the stock price is rising, the buying power is strong and KDJ continues to rise. I will take the 80 line as the dividing point between the overbought area and the normal area. When the indicator exceeds 80 and enters the overbought area, there is a possibility of a subsequent stock correction. Let me tell you secretly that among the KDJ three lines, curve D entering the overbought zone sends the strongest trading signal.
It can be seen that the stock had a previous upward trend. During the upward movement of the K line, the KDJ indicator followed the upward trend and entered the overbought area. This indicates that the stock is likely to pull back in the short term. Note that the K-line is still on the way up. You should calm down, hold shares calmly and wait patiently. After a few trading days, it can be seen from the chart that the K-line has insufficient upward energy. A long upper shadow line appears near the high price. At the same time, the KDJ indicator shows signs of turning downward, which means that the stock market is about to weaken. , smart traders sell stocks in batches.
Some fans here asked me if the stock is in the overbought area, will the price fall? Watch until the end of the video and I'll tell you how. Let me tell you clearly that when KDJ enters the overbought area, the stock price will not necessarily fall. It can only be said that the stock price is currently in a dangerous area. Institutional traders will sell the stocks in their accounts in batches here. In the future, the K line may fluctuate. Top, the act of distributing chips will cause the stock to fall back. Smart traders will reduce their positions in overbought areas, not sell them all, and wait for the price to fall back before buying the stock back again.
After mastering the principles and techniques of the KDJ indicator overbought zone, many traders like to use the KDJ indicator to enter the overbought zone and conduct swing trading. According to statistics, this is an easy and profitable trading strategy. After the curve enters the overbought zone, if there is no sign of turning, it means that the stock is currently in a rising stage with strong momentum, which is caused by the continued increase in buy orders. However, the risk at this time is also relatively high, and it is a high-risk, high-yield operation.
In the chart, Apple stock has seen a continuous rise in recent days. During the upward movement of the K line, the KDJ indicator was the first to notice and moved upward at the same time. Subsequently, it entered the overbought range, indicating that the stock trend was very strong at this time. After a short correction, the indicator continued to move upward, showing a bullish divergence pattern.Then, there is a high probability that it will continue to rise in the short term. You can continue to follow the market, formulate a trading plan, manage risks at the same time, and wait for profits.
Starting from the principle of linear regression, the k-line movement will fluctuate up and down around the center point. When the K-line rises too fast, it will fall back to the midline. The overbought prompt of the KDJ indicator is designed based on this principle. The midline is not a fixed price, but the 50 line in the indicator. All in all, when the K line rises too fast, the KDJ indicator will enter the overbought area, and it is very likely to move towards the midline in the future.
If you find that the indicator shows an overbought signal, it is when the stock price trend is the strongest. This is also when the market makers are trading a large amount of money. When you learn the KDJ indicator I described to analyze stocks, you will catch a lot of stocks. Trading opportunities. Be careful not to chase prices blindly. Once a peaking signal appears in the trading system, positions should be reduced in batches. I have seen many retail investors buy impulsively or even increase their positions during the rapid rise of stocks. Subsequently, the stock peaked and plummeted, and the result was that it was firmly stuck at the top of the mountain. If the KDJ indicator shows a dead cross at a high stock price, you should clear your position and leave the market in time.
The second knowledge point is that the KDJ indicator has entered the oversold zone. When the stock is falling, the supply of market makers is very sufficient, and there is a steady stream of sell orders, causing the KDJ indicator to continue to fall. Let me tell you a way to identify the strength of the trend. The larger the downward angle of the indicator, the greater the downward energy. In addition, you can use the 20 line of the KDJ indicator as the dividing point between the oversold area and the regular area. If the value is lower than 20, it means that the indicator has entered the oversold area.
If you find that the indicator drops below the 10 line in the oversold zone, it means that the downward energy of the K-line is about to reach its limit, it may hit the bottom, and the stock price may stop falling at any time. In addition, when the stock price falls strongly, there will be a mysterious force attracting the indicator to return to the center line.
Let's look at a case where the stock on the chart had a strong downward move on the short side. During the downward trend of the K line, the KDJ indicator continued to decline and entered the oversold zone. Then the indicator slowed down and the energy weakened, indicating insufficient supply in the market. If you hold a short position at this time, you should find the right opportunity to reduce your position.If you want to buy stocks, don't rush and wait for a trend reversal signal before entering the market. However, the stock plummeted by 40% a few days later without waiting for a clear trading signal to reverse the trend. Investors who were eager to enter the market suffered heavy losses.
Note that if the indicator shows an oversold signal and the K-line is in a rapid downward stage and rebounds midway, it is recommended that you do not blindly buy stocks. Institutions often use false rebound K-line patterns to lure retail investors into the market. You must resist the urge to buy to avoid being cheated.
In the chart, Apple stock had a sharp plunge at the beginning of the month. During the downward trend of the K line, the KDJ indicator entered the oversold area. Observing that the three lines do not cross and there is no sign of turning upward, it indicates that the stock may continue to decline in the future. However, the downward movement may not last long, and a counterattack may follow. It can be seen that the stock's continuous decline in the following trading days really showed an oversold rebound trend, and a golden cross appeared subsequently, which means that the short trend is about to end and a new trend is coming. Radical traders can trade in batches Buy stocks.
The third type is the area between the 20 line and the 80 line of the KDJ indicator, which is called the regular area.
Sometimes, the indicator crosses the 50 line from bottom to top, and the stock market has signs of a short trend turning to a bullish trend. When the KDJ third line continues to move above 50, it means that the current main trend of the K line is upward. According to the trading principles of the time frame, it should be mainly long and buy on callbacks.
In addition, when the indicator crosses the 50 line from top to bottom, it represents a sign that the stock market is changing from a bullish trend to a bearish trend. When the KDJ indicator moves below the 50 line, institutions are distributing chips. The supply in the market is greater than the demand. The short market occupies a dominant position. Going short with the trend is a relatively safe trading strategy.
The trading system of an expert is often very simple. Under the principle of trend trading, in an upward trend, wait for the turning point of the oversold signal to appear during the callback; in the downward trend, wait for the turning point of the overbought signal to appear, and then you can easily seize the buying and selling point. Make big money by following the power of trends.