"Throw high and suck low" are four words that often appear in the stock market and futures market. Theoretically, these four words are absolutely correct and almost nonsense. However, this degree is extremely difficult to grasp! High throw, how high? Is it 1000 or 2000? Is it 5000 or 6000? Higher in the back! Once the contract is sold, it keeps hitting new highs? Regret! Regret! Regret! I hope it falls quickly? Or reach your predetermined price, but you can't bear to throw it away! Look at the rising curve and think about the increasing profit figures in your account? Music! Music! Music! I hope it never goes back up? But it backfired! The market has turned sharply? Your profit is decreasing? Wait a minute, play some before throwing! As we all know, what is low? Wait until the profit becomes a loss! Is the stage low and refreshing? Who knows where this "low" is Where is Gao? With the price forecasting ability of ordinary retail investors, it is often found that the result of bargain-hunting is that futures prices are getting lower and lower, and finally the whole line is locked up; Selling on rallies means that the higher the selling price, the less money you earn than others. Therefore, the words "high throwing and low sucking" are easy to say and really difficult to do.
As a result, many investors turned to look for shortcuts, waiting for futures prices to fall to the bottom before seeing the rise and chasing up, and waiting for the rally to come to an end before seeing the bearish fight, which is what investors often say. Is it simple? It's simple! But it backfired! When you finally couldn't hold back your inner impulse to chase up, the market played a joke on you! The price has plummeted, and you are stuck on a high "mountain top"-this is called "chasing up"! Or in the end, you can't resist the impulse and turn your face. The blood is still flowing after the meat is cut, but the market has bottomed out and you are killed at the bottom-this is called "killing down"!
The market is like this! Once it rises, it will make your eyes greedy and your blood boil! Once it falls, it will surprise you until it scares you (see figure 1 example)!
Figure 1 How to avoid the tragedy of China International from repeating itself in stock index futures?
As can be seen from the above, it takes patience to throw high and suck low, and it takes courage to chase up and kill down. Before "throwing" or "sucking", you must have a good judgment on the top or bottom; Similarly, "chasing up and killing down" can't wait for the stock price to rise for a while before chasing, or the stock price has fallen a lot before playing. Only when the low position is chasing up and the high position is killing down is correct.
So what can help us judge that the bottom or top has arrived and predict that the uptrend or downtrend is coming to an end? The simplest answer is: indicators and charts! Of course, in judging or forecasting, technical indicators and charts are not omnipotent, but without them, we can't do anything!
Let's look at Figure 2 and Figure 3.
Figure 2IF0906 Technical Index Combination Diagram (I)
Figure 3IF0906 Technical Index Combination Diagram (II)
As can be seen from Figure 2, the technical indicators used in the chart include deviation (deviation rate), RSI (relative strength indicator), KDJ (random indicator) and MTM (dynamic indicator). In the top area or bottom area, these technical indicators vibrate! Obviously, it gives investors a warning signal that this stage will reach the top or end. At this time, it is obviously unwise to adopt the strategy of "chasing up and killing down", but we can consider the strategy of "throwing high and sucking low". It can be seen that such technical indicators can help us to judge whether the futures price is at the bottom or at the top. This index is called "swing index" because it often oscillates and swings back and forth in an upper and lower region with 0 as the central axis.
Also in Figure 2, if you switch to another type of indicator, what kind of warning signal will you get?
In Figure 3, we find that the K-line combination "Yin flourishes while Yang declines", the short-term moving average and the medium-and long-term moving average are arranged in short positions after the "dead fork", the SAR (parabolic indicator) is gradually pressed down, the MACD two lines (moving average convergence and divergence) fall below the 0-axis, and the DMI (trend indicator) is enlarged, all warning the bear market. When the above indicators have strengthened, it also warned of the arrival of the rising market.
The biggest feature of such indicators is to use the intersection of two or more lines to remind investors that the market trend has changed, so as to remind investors to carefully adopt the strategy of "throwing high and sucking low" before the market trend changes, and it is wise to adopt the strategy of "chasing up and killing down". It can be seen that such technical indicators tell us the trend of futures prices, so such indicators are called "trend indicators".
Almost all trading systems will automatically carry a large number of the above technical indicators, and investors can study them carefully to find technical indicators suitable for their trading characteristics.