First consider the value of KD. The range of KD is 0~ 100, which is divided into several areas: over 80 is overbought area, below 20 is overbought area, and the rest is wandering area.
According to this classification, if KD exceeds 80, we should consider selling, and if KD is below 20, we should consider buying. It should be noted that the above division is only a preliminary process of applying KD index, and it is just a signal. If you operate completely in this way, it is easy to lose money.
Second, consider from the shape of KD index curve. When the KD index forms a head-shoulder top shape and multiple tops (bottoms) at a higher or lower position, it is a signal to take action. Please note that these forms must appear in a higher or lower position. The higher or lower the position, the more reliable the conclusion.
Third, consider from the intersection of KD indicators. The relationship between K and D, like the relationship between stock price and MA, also has the problems of death crossover and gold crossover, but the application of crossover here is very complicated, and many other conditions are attached.
Take the bottom-up intersection of K and D as an example: K intersection D is a golden intersection and a buying signal. However, whether you should buy a gold fork depends on other conditions. The first condition is that the position of the golden fork should be relatively low, especially in the oversold area. The lower the better.
The second condition is the number of times to intersect with d, sometimes in the low position, k and d have to intersect back and forth several times. The minimum crossing times is 2, and the more the better.
The third condition is the position of the intersection point relative to the low point of KD line, which is often referred to as the "right intersection point" principle. K only intersects D when D looks up, which is much more reliable than when D is still falling.
Fourth, consider from the deviation of KD index. If KD is high or low, if it deviates from the trend of stock price, it is a signal to take action.
Fifthly, the KD indicator 100 or above, and the value below 0 belongs to the abnormal price area; the value above 100 is overbought and the value below 0 is oversold.
The overbought of kdj indicators can be judged by the three curves of indicators entering the overbought area. Specifically, the value of d is above 80, the value of k is above 90, and the value of j is above 100. When the three curves of kdj index enter the overbought area one after another, it can be judged that the stock has been overbought. At this time, the stock should be sold in time to avoid the risk brought by the stock price correction.
According to the principle of dynamic equilibrium, stock prices tend to move back and forth around a certain center. When the stock price rises too fast, it will move closer to the middle line. The overbought of kdj indicator is based on this principle, and the 50-line is the middle line of stock price operation. When the stock price rises too fast, each line of kdj will enter the overbought area, and the probability of the stock price moving closer to the middle line will increase.
Many times, when the kdj indicator signals overbought, it is often the time when the stock price rises the most violently, and it is also the time when traders make the most profits. If other selling signals are issued later, investors should lighten their positions according to their risk tolerance.
Risk disclosure: This information does not constitute any investment advice. Investors should not substitute such information for their independent judgment, or make decisions only based on such information. It does not constitute any trading operation and does not guarantee any income. If you operate by yourself, please pay attention to position control and risk control.