Since entering the cryptocurrency space and trading contracts, life has been getting worse day by day: money is gone, hair has turned white, the house is mortgaged, and salary is not enough to pay debts. However, it is not all in vain; I have gained a lot of lessons to share with everyone, helping you avoid pitfalls. Today's theme is: is it useful to memorize K-line patterns? After reading the following content, I believe you will have a sudden realization!
One, the formation of K-lines
K-line is derived from a continuous price change curve over a period of time, taking the starting price at the beginning of the time, the closing price at the end of the time, the highest price, and the lowest price, resulting in an image similar to a candle.
Two, why do prices change?
It is caused by the imbalance of trading volumes of buy and sell orders. When buying volume exceeds selling volume, prices will rise; when selling volume exceeds buying volume, prices will fall. Because it is difficult for buying and selling volumes to maintain balance for a long time, prices are constantly changing, just with different magnitudes of change.
Three, what is the reason for the small price fluctuations?
When there is no main force involved, because there are enough retail investors, those who are bullish and bearish are almost fifty-fifty, so the difference between buying and selling volumes is not significant, leading to prices only fluctuating slightly within a very small range.
Four, what causes significant price fluctuations?
In most cases, it is caused by the main force's operations. The main force represents large capital (institutions, large investors, operators), and because the trading volume is large enough, it can cause a sudden imbalance in buying and selling forces. In a few cases, it is due to the impact of news that causes retail investors to collectively buy or sell, such as wars, exchange loopholes causing panic, favorable interest rate cuts by the Federal Reserve, Elon Musk tweeting support for DOGE to buy a car, government support, etc., creating a collective bullish sentiment.
Five, what kind of K-line has reference value?
From the above content, it is not difficult to see that only when prices fluctuate significantly is the main force involved. Only by following the main force can better profits be obtained. The K-lines left during this time are often long bullish or bearish lines. When the main force wants to push prices up, they often suddenly pull up at the end of the washout, leaving a long bullish line. The price below the bullish line is the cost price that the main force does not want retail investors to buy. Therefore, once the price returns below the bullish line or approaches below the bullish line, the main force will buy to protect the market and prevent the price from continuing to fall. At this time, as retail investors, we should follow in to buy instead of panic selling; when the main force wants the price to fall, they often suddenly dump at the end of unloading, leaving a long bearish line. When the price again approaches above the bearish line or is close to it, the main force will continue to unload; at this time, we should follow the main force to unload instead of buying and getting trapped. A real dump may not even rebound to this price, because there isn't much stock left, and the main force wants to dump all at once, so they will continue to lower the price with sell orders to prevent it from rising. Retail investors will panic and sell when they see the price continuously falling; if it is a contract market, short positions will often become the buying force for the main force's unloading, so the price will repeatedly break new highs. The rise at this time may not be due to the main force's buying but may be driven by stop-loss buying from short orders, while stop-loss selling from long orders when dumping also contributes to selling pressure, causing rapid price drops. Continuous price drops at low levels may not be the main force selling, but may be caused by retail investors' stop-loss from long positions. In the contract market, entering at retail investors' stop-loss positions for long positions at low levels has an advantage; entering for short positions at high levels must be at retail investors' stop-loss points to have an advantage; entering for long positions at high levels must be after the main force has unloaded, that is, after a pullback, wanting to enter and follow up when aiming for a second rise, so as not to cause chasing highs and killing lows continuously leading to stop-losses. Shorting at low levels must wait until retail investors' stop-loss and the main force buying occurs, which means after a rebound, wanting to dump again when hitting long stop-loss positions before entering, instead of chasing highs and killing lows repeatedly leading to stop-losses.
Six, is it useful to memorize a single K-line?
After the above study, the conclusion is very clear: it is of no use at all, purely a behavior of being a retail investor.
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Since entering the cryptocurrency space and trading contracts, life has been getting worse day by day: money is gone, hair has turned white, the house is mortgaged, and salary is not enough to pay debts. However, it is not all in vain; I have gained a lot of lessons to share with everyone, helping you avoid pitfalls. Today's theme is: is it useful to memorize K-line patterns? After reading the following content, I believe you will have a sudden realization!
One, the formation of K-lines
K-line is derived from a continuous price change curve over a period of time, taking the starting price at the beginning of the time, the closing price at the end of the time, the highest price, and the lowest price, resulting in an image similar to a candle.
Two, why do prices change?
It is caused by the imbalance of trading volumes of buy and sell orders. When buying volume exceeds selling volume, prices will rise; when selling volume exceeds buying volume, prices will fall. Because it is difficult for buying and selling volumes to maintain balance for a long time, prices are constantly changing, just with different magnitudes of change.
Three, what is the reason for the small price fluctuations?
When there is no main force involved, because there are enough retail investors, those who are bullish and bearish are almost fifty-fifty, so the difference between buying and selling volumes is not significant, leading to prices only fluctuating slightly within a very small range.
Four, what causes significant price fluctuations?
In most cases, it is caused by the main force's operations. The main force represents large capital (institutions, large investors, operators), and because the trading volume is large enough, it can cause a sudden imbalance in buying and selling forces. In a few cases, it is due to the impact of news that causes retail investors to collectively buy or sell, such as wars, exchange loopholes causing panic, favorable interest rate cuts by the Federal Reserve, Elon Musk tweeting support for DOGE to buy a car, government support, etc., creating a collective bullish sentiment.
Five, what kind of K-line has reference value?
From the above content, it is not difficult to see that only when prices fluctuate significantly is the main force involved. Only by following the main force can better profits be obtained. The K-lines left are often long bullish or bearish lines. When the main force wants to push prices up, they often suddenly pull up at the end of the washout, leaving a long bullish line. The price below the bullish line is the cost price that the main force does not want retail investors to buy, so once the price returns below the bullish line or approaches below it, the main force will buy to protect the market and prevent the price from continuing to drop. At this time, as retail investors, we should follow in to buy instead of panic selling; when the main force wants the price to fall, they often suddenly dump at the end of unloading, leaving a long bearish line. When the price again approaches above the bearish line or is close to it, the main force will continue to unload; at this time, we should follow the main force to unload instead of buying and getting trapped. A real dump may not even rebound to this price, because there isn't much stock left, and the main force wants to dump all at once, so they will continue to lower the price with sell orders to prevent it from rising. Retail investors will panic and sell when they see the price continuously falling; if it is a contract market, short positions will often become the buying force for the main force's unloading, so the price will repeatedly break new highs. The rise at this time may not be due to the main force's buying but may be driven by stop-loss buying from short orders, while stop-loss selling from long orders when dumping also contributes to selling pressure, causing rapid price drops. Continuous price drops at low levels may not be the main force selling, but may be caused by retail investors' stop-loss from long positions.
