After buying at the lowest price, the increase occurs. It’s like walking on the road where people come and go, and the 66th person gifts you a diamond 💎 as a fateful encounter. 🥰 Happiness is about bottoming out; so how do we bottom out?
Five minutes to teach you how I bottom fish
In the stock market and trading, bottom fishing is a challenging skill. It requires keen insight into market trends and high patience and execution. Simply put, bottom fishing is about finding the right reversal point during a price decline, decisively entering the market, and thus maximizing profits at low prices. However, be aware that true bottom fishing is not an impulsive act but a precise judgment of market fluctuations.
What is bottom fishing?
The core of bottom fishing lies in judging whether it has already experienced sufficient decline and whether it meets the conditions for reversal. If it hasn't finished declining, blindly entering may lead to being trapped 'halfway up the mountain'—that is, the downtrend is not over, and the entering funds may get stuck midway, waiting for the real bottom to appear, and possibly missing the opportunity due to fear, ultimately leading to a perfect miss.
Therefore, learning to judge whether the trading price has dropped to the extreme and avoiding failed bottom fishing has become the key to our profitability.
Three major steps of bottom fishing
1. Look for densely traded areas
Densely traded areas refer to the regions where prices oscillate repeatedly over a certain period, which can also be understood as areas where multiple trades occur within a certain range. The trading volume here is usually concentrated, making it a place for repeated competition among market funds. In these areas, the emotions of buyers and sellers are relatively opposing, forming a price oscillation range. When returning to this area and no obvious signs of decline appear, the possibility of a reversal is greater. (Sideways)
2. Compare sizes: Find the largest densely traded area
In all densely traded areas, there may exist multiple oscillation ranges. The key is to identify the area with the largest size, the most K-line counts, and the longest stagnation time. These 'largest area' trading zones usually represent that both the bulls and bears have engaged in fierce competition multiple times in this area. At this point, the market price often accumulates enough energy, and once it breaks through or hits the bottom, the rebound strength will be strong.
You can repeatedly study historical trends to find these important densely traded areas and mark them on the charts. This way, when the price approaches these areas next time, you will be mentally prepared and ready for the rebound.
3. Look for divergence: Identify signals of weakening strength
The so-called 'divergence' refers to the phenomenon where certain technical indicators do not follow the price to create new lows during a price decline. For example 🌰: If you are Little A and you participate in a cross-country marathon. According to common logic, the more you rest, the longer your next running distance should be. However, in reality, as the rest time increases, your recovery speed slows down, and the subsequent running distance shortens. At this point, your physical strength has entered a stage of exhaustion, and you can’t run anymore; the finish line of the race is approaching. Generally, in this situation, the next thing that happens is a rise.
The occurrence of divergence means that the momentum of the decline is gradually exhausting, market sentiment has reached its limit, the downward trend of prices is losing momentum, and a rebound may occur at any time.
How to practice?
When you determine that there is a divergence phenomenon in the market and the price is close to the largest densely traded area, you can attempt to enter the market. However, it is particularly important to note: bottom fishing is not a one-time effort; never operate with a full position. My personal habit is to gradually build positions, and it is also recommended to enter the market in batches. This can effectively reduce risk and avoid significant losses caused by a failed one-time entry.
In summary, the key to bottom fishing is to find the correct densely traded area, confirm the divergence signal, and gradually build positions based on this. Remember, bottom fishing is not just a judgment; it’s also a refined operational strategy.
CC㊗️ Brothers and sisters, bottom out at the lowest point and leap into the highest peak!!