Since I entered the cryptocurrency circle and started playing with contracts, my life has been getting worse day by day. I have lost money, my hair has turned white, my house has been mortgaged, and my salary is not enough to pay off my debts. However, it has not been in vain. I have learned a lot of lessons, which I would like to share with you so that you can avoid pitfalls. Today's topic is: Is it useful to memorize K-line patterns? I believe you will suddenly realize it after reading the following content!
1. The formation of K-line
The K-line is a candle-like image obtained by taking the starting price, ending price, highest price and lowest price from the continuous price change curve over a period of time.
2. Why do prices change?
This is because the trading volume of buy and sell orders is unbalanced. When the buying volume is greater than the selling volume, the price will rise. When the selling volume is greater than the buying volume, the price will fall. Because it is difficult to maintain a balance between the buying and selling volumes for a long time, the price is changing all the time, but the magnitude of the change is different.
3. What is the reason for the small price fluctuations?
When there is no major player involved, because there are enough retail investors and the bullish and bearish views are almost evenly split, the difference between the buying and selling volumes is not that big, resulting in prices only changing slightly within a very small range.
4. What causes the large price fluctuations?
In most cases, it is caused by the main force, which represents large funds (institutions, big investors, traders). Because the trading volume is large enough, it can cause a sudden imbalance in buying and selling power. In a few cases, it is due to the influence of news that causes retail investors to buy or sell collectively, such as war, exchange loopholes, etc. causing panic, the Federal Reserve's interest rate cut, Musk's tweet supporting DOGE coins to buy cars, government support, etc., causing a collective bullish mentality.
5. What kind of K-line has reference value?
From the above content, it is not difficult to see that only when the price fluctuates greatly is the time for the main force to participate. Only by following the main force can we better obtain profits. At this time, the K-line left behind is often a long big Yang line or a big Yin line. When the main force wants to push the price up, it often suddenly pulls up and leaves a big Yang line at the end of the wash. Below the Yang line is the cost price that the main force does not want retail investors to buy. Therefore, once the price returns to below the big Yang line or approaches below the big Yang 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 the entry to do more instead of panic selling; when the main force wants to make the price fall, it often suddenly smashes the market at the end of the shipment. At this time, a big Yin line will be left. When the price comes to the top of the big Yin line again or approaches the big Yin line, the main force will continue to ship. At this time, we should follow the main force to ship instead of buying quilts. The real smash will not even rebound to this price, because there are not many goods in hand. The main force wants to smash it all at once, so it will keep using sell orders to lower the price to prevent the price from rising. Retail investors will panic sell when they see the price falling all the time; if it is a contract market The short orders in the market will often become the buying power of the main force to ship out, so the price will break new highs again and again. The rise at this time may not be the main force buying, but the stop loss buying of short orders is pushing the price up. At the same time, the stop loss of long orders is also a selling force when the market is smashed, which will cause a large number of selling prices to fall rapidly. The continuous decline in low prices may not be the main force selling, it is likely to be caused by the stop loss of retail long orders. In the contract market, long positions at low levels must be entered at the stop loss position of retail long orders to have an advantage, and short positions at high levels must be entered at the stop loss position of retail short orders to have an advantage. Long positions at high levels must be entered after the main force ships out, that is, after the pullback, and follow the entry when you want to pull up again, so as not to cause continuous stop losses by chasing ups and downs. Short positions at low levels must wait until the main retail stop loss buys in, that is, after the rebound, and then enter the market when you want to smash the market again to hit the long order stop loss, instead of constantly stopping losses by chasing ups and downs.
6. Is it useful to memorize a single K-line?
After studying the above, the conclusion is very clear: it is completely useless and is pure behavior of a leek.
