🔥Washout or Distribution❓ Core Strategy Analysis

Friends, the greatest pain in stock trading is misjudgment: thinking it's distribution and selling, but missing a good opportunity (washout and selling prematurely)😭; thinking it's a washout and bottom-fishing, but standing on the mountain top and catching the wind (distribution and absorbing orders)🥶.

How to distinguish these two faces of the main force? Today, we have summarized the key differences for you. We recommend liking and saving this for reference during trading.

🕵🏻‍♀️ Core Purpose Analysis:

✓ Washout = “Intimidate you”: The market maker aims to clear out those with weak resolve, increasing holding costs, to facilitate subsequent rise! Usually in the middle of the stock’s ascent (midway up).

❌ Distribution = “Tempt you”: The market maker creates a false appearance of rising prices, attracting follow-up buyers to buy in, making it easier to cash out and run away! Usually at the stock’s peak (stagnant zone).

Volume does not lie🤥 (Key Point):

Washout characteristics: Volume shrinks during decline📉, the candlesticks appear to fall sharply (e.g., large bearish candles), but the trading volume shrinks significantly like a closed tap, indicating the main force is holding their position and not moving, only retail investors panic and cut losses🥩.

Distribution characteristics: Volume increases during stagnation or decline, with the stock oscillating at high levels or declining slightly, but the trading volume is huge, like a dam releasing floodwaters, indicating the main force is aggressively selling off chips.

🧠 Psychological Battle:

When you feel hopeless and fearful, eager to cut losses and exit, it’s usually the end of the washout phase.

When you feel excited and greedy, afraid of missing out, and want to go all-in, it’s a trap of distribution🪤.

Finally, a tip to avoid pitfalls: Be cautious with high-volume surges at high levels, don’t give up easily during low-volume declines, and when unclear, controlling your position is the best defense.
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