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Trading Strategy Chapter [Taogu Ba]

My Thoughts on Leading Stock Trading Strategies (1)
Original Author

First, let’s talk about the market sentiment pattern. Before discussing the pattern, please both you and I adjust our attitudes. First, I have been in the market for 27 years; ordinary people are not qualified to criticize me. Second, before the market drops below 500,000, I still have profits in it. Third, I know my own capabilities and should have a clear understanding of my own strength. Only when I am confident in my own stance can I discuss the market pattern with you, and you will have an open mind to listen!

Many people prefer short-term trading and dive into thematic research, which is not correct. If it were, this market would have produced countless billionaires and hundred-millionaires, right? Because 95% of short-term traders like to study themes and sectors, but every month there is always a leading stock that doubles, yet who can consistently hold onto it multiple times?

First, let’s talk about emotions. Everyone agrees that stocks themselves do not fluctuate; their volatility comes from human emotions.

But the key point is this: emotions are divided into two categories—long-term emotional value and short-term emotional value. Thematic stocks are only part of the short-term emotional value. True leading stocks must be a resonance of both long-term and short-term emotional values. As shown in the diagram, if there is no long-term emotional value, the stock price mostly drops like A-shock.

If there is long-term emotional value, you will see that it is not A-shock, but ACB rising.

What I just described is the pattern. The real leading stock strategy must involve resonance across large, medium, and small scales. If the large scale is based on cycle pressure patterns; the medium scale is formed by time cycle attack patterns; the small scale is based on intraday volume quantification.

Additionally, from the perspective of trading volume, stocks can be classified into three types: high-volume days, low-volume accumulation days, and volume reversal days.

Everyone knows that trading volume is the most important indicator among all indicators, bar none. Increasing volume indicates divergence; decreasing volume indicates consensus. The leading stock strategy must involve trading volume days, especially weak-to-strong transitions within high-volume days. This is a difficult point because under what circumstances does weak transition to strong, and when does high volume occur? High volume originally refers to divergence volume.

First, save this for now, and I will explain more next time.