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Five forms of trading volume technical aspect volume price theory

Because the market is the result of the interaction of various forces. Although trading volume is easier to fake, and the main force of controlling the market often uses the majority of retail investors' little knowledge of technical analysis to make fuss on various indicators, trading volume is still one of the most objective elements.

1. Market divergence led to transactions

The so-called transaction, of course, can only be achieved when there is a purchase or a sale. A transaction cannot be achieved by buying or selling alone. The transaction is bound to be that some people are short on the market outlook, and some people are bullish on the market outlook, causing huge divergence.

2. Shrinkage

Shrinkage means that market transactions are extremely thin, and most people agree with the market trend in the later period, and their opinions are very consistent. There are two situations here: one is that market participants are very pessimistic about the market outlook, causing only people to sell, but no one buys, so the volume shrinks sharply; second, market participants are very optimistic about the market outlook, only people buy but no one Sell, so it shrinks sharply. Shrinkage generally occurs in the middle of the trend. Everyone agrees with the trend of the market. When it falls and shrinks, it should be resolutely out of the game, shrink to a certain level, and buy when it starts to increase its volume. In the same way, when the volume is rising and shrinking, in this situation, you should resolutely buy, wait to make a profit, and wait for the stock price to weaken, and then sell when there is a huge amount of release.

3. Heavy volume

Heavy volume generally occurs at the turning point of the market trend. The forces of the market gradually increase their differences on the market outlook. When some people are resolutely bearish on the market outlook, other people are firmly optimistic about the market outlook. Some people are absorbing it in a big way. Compared with shrinking, there is a lot of falsehood in increasing the amount. The main force of the control board uses the bargaining chip in hand to make a big amount of money, which is very simple. As long as the main force's intentions are thoroughly analyzed, the tactics can be used.

4. Heap amount

When the main force wants to pull up, they often make the trading volume very beautiful. In the past few days or weeks, the trading volume has slowly increased, and the stock price has slowly pushed up. The trading volume has formed a soil-like shape on the recent K-line chart. The shape of the pile, the more beautiful the pile, the more likely it is to produce a big market. On the contrary, the high volume indicates that the main players no longer want to play, and they are shipping heavily.

5. Volume irregularities are enlarged and reduced

This situation is generally on the premise that there is no sudden positive or the market is basically stable. The demon village suddenly released a huge amount of history when the wind is calm, and then there is no back tone. Generally, the weak bookmaker is attracting the market’s attention. Shipment.

The relationship between market volume and price

1. Confirm the current price trend

The market is going up or down, and its trend can be confirmed by a larger volume or an increasing volume. Going against the trend can be confirmed by decreasing or light trading volume.

2. Warning of weak trend

If the market volume keeps dropping sharply, it warns that the current trend is beginning to weaken. Especially when the market sets new highs or new lows under light trading volume, the above judgments are more accurate. In the case of light trading volume, new highs or new lows should be questionable.

3. How to confirm interval break

When the market loses its operating trend, it is in range fluctuations, and a breakthrough in the range when a new high or new low is achieved will be accompanied by a sharp increase in trading volume. The price breakthrough but the lack of cooperation with the volume indicates that the market has not really changed the current operating range, so more caution should be exercised

4. Trading volume catalyzes the rise and fall of stock prices

The size of a stock's trading volume reflects how attractive the stock is to the market. When more people or more funds are optimistic about the future of stocks, they will invest funds; when more people or funds are not optimistic about the future of stocks, they will sell the stocks in their hands, causing the price to fall. But in any case, this is a relative process, that is to say, not all people are "unanimously" bullish or bullish on stocks.

This is a relatively simple view, and the deeper meaning is that the stocks are in different price areas, and the number of bullish people and bearish people will change. For example, there are currently 100 people in the market participating in the transaction. When the price of a certain stock is 10 yuan, there may be 80 people who are optimistic, thinking that there will be a higher price in the future, and when all 80 people buy in, it really causes the price to rise; the stock price reaches 30. At the time of Yuan, 30 of the people who bought at first thought that the price would not continue to rise, so they would sell the stock, while the 20 people who were initially bearish might have changed their views and believed that the price would rise. At this time, the price had an instant. Unbalanced, with 30 people selling and 20 people buying, the price drops. The number of bullish and bearish people will regroup and decide the next move.

Most people have a wrong view: the greater the stock volume, the higher the price. You know, for any buyer, there must be a corresponding seller, regardless of the price. In a price area, if the volume is unexpectedly enlarged, it can only show that people in this area have very big differences. For example, 50 people are bullish and 50 people are bearish; if the volume is very light, it means that there are very few people who have differences. Or people don't care about the stock. For example, 5 people are bullish, 5 people are bearish, and 90 people are indifferent or on the sidelines.

The degree of attraction of a certain stock to the market can be analyzed from the change in trading volume. The greater the trading volume, the more attractive it is, and the greater the price fluctuation range in the future may be.

The price pressure and support area of a certain stock can be analyzed from changes in trading volume. In a price area, if the volume is large, it means that there is a lot of pressure or support in the area, and the trend will stop or reverse here.

You can observe the direction of the price going out of the densely traded area. When the price goes out of the intensive trading zone, it indicates that the long-short divergence has been temporarily unified. If it goes upward, the price tends to rise; if it goes downward, the price tends to fall.

You can observe the relative value of the volume in different price areas to judge the health or sustainability of the trend. As the price of a certain stock rises, the trading volume should show a stepwise decrease. Generally speaking, the higher the corresponding price of the stock, the fewer people interested or daring to participate. However, this point will be simpler and more concise from the perspective of turnover.

The change in price trend cannot be judged based on the volume alone, at least the price must be confirmed. Trading volume is an important factor in price changes and a factor that may cause essential changes, but most of the time, it only acts as a catalyst. There is a perception in the market that the rise of individual stocks or stock indexes must be coordinated with quantity and energy. If the price rises and the volume increases, it means that the upward momentum is sufficient, indicating that the individual stock or stock index will continue to rise; on the contrary, if the volume shrinks and rises , It is regarded as an infinite empty rise, and the volume and price coordination is not ideal, indicating that individual stocks or stock indexes will not have a large upside or it is difficult to continue to rise.

Individual stocks or the broader market have shrunk after a substantial increase in volume, which is obviously a bad thing and clearly indicates the unfolding of a round of decline. For example, on May 18 and May 21, 2001, the Shanghai stock market's trading volume was enlarged to 20 billion and 21.7 billion. After that, the volume could no longer be enlarged and began to organize horizontally. After the market peaked on June 14, the market contracted significantly. , The volume began to decline on June 27, and the decline accelerated on July 23. By October 22, it fell to 1514 points. This round of decline that began on June 27 fell by more than 700 points and lasted as long as 4 Months, is a typical decline caused by volume shrinkage after heavy volume. But it must not be forgotten that the stock index in the initial stage of the decline is above the high of 2200 points after the long-term bull market!

An example to the contrary is that on March 8 and March 9, 2002, the Shanghai stock market's trading volume was enlarged to 23.8 billion and 21.3 billion. After the contraction and consolidation, the 6.24 market finally broke out. It is undeniable that with the outbreak of the 6.24 market, the positive news played a big role. However, on June 21st, the Shanghai stock market transactions were greatly enlarged, indicating that a new round of rising is about to begin, but the major benefit of stopping the reduction of state-owned shares greatly strengthened the explosive power of the rise, but also greatly shortened the duration of the market. , The sharply enlarged trading volume and the influx of over-the-counter funds made it unsustainable for capital, which led to the collapse of the market. In just 5 trading days, the Shanghai stock market traded more than 165 billion, and then the market contracted and fell. On January 6, 2003, the stock index hit a new low of 1311 points since the second half of 1999, and this round of decline has fallen. More than 400 points, lasting more than half a year. This is another typical decline caused by volume reduction after heavy volume, but we must also pay attention to the initial stage of the decline after the stock index hit a new high of 1748 points in 2002. At that time, the stock index was at a staged high, and the decline was inevitable. Up.

On January 14 and January 15, 2003, the trading volume expanded to 23.5 billion and 21.7 billion, a total of 45.2 billion, indicating that the bulls began to enter the market in large scale, and then the market began to shrink, but the stock index rose instead of falling, which is a typical contraction. Rising, which means that the investors who entered the market on January 14 and January 15 did not flee, the chips are locked in well, and the upward selling pressure is relatively light, so the shrinkage can still rise. Like the shrinking volume, the shrinking volume increase can generally last for a long time.

A negative drop in volume indicates that the market is in a weak position, and a very small trading volume can lower the stock index. After a negative drop, there will be a sharp drop in volume, which is extremely detrimental to many parties. Conversely, a shrinking volume increase indicates that the market is in a strong position, and a smaller volume can drive the stock index upward, and then it will inevitably increase in volume. This is the case for the broader market, and even more so for individual stocks. Don't forget, the stock index is still near the 1500 "policy bottom", which is only February. Just like nature, it is still in the bud, and the spring is not yet blooming. Hope is great! ST Zhongyan has been shrinking (or basically infinite) since January 13, 2003. It has told us that shrinking can not only increase, but also can increase greatly!

This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors.  It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.