First, determine the opening price and closing price, and draw the part between them into a rectangular entity. If the closing price is higher than the opening price, the K line is called the positive line, which is represented by a hollow entity. On the contrary, it is called a negative line and is represented by a black entity or a white entity. Many softwares can use colored entities to represent negative and positive lines. In the domestic stock and futures markets, red is usually used to represent the positive line and green is used to represent the negative line. However, investors who participate in European and American stock and foreign exchange markets should pay attention to the fact that in these markets, green is usually used for the positive line and red for the negative line, which is just the opposite of domestic habits. ) Connect the highest price and the lowest price with the entity with thin lines. The line between the highest price and the entity is called the upper shadow line, and the line between the lowest price and the entity is called the lower shadow line.

Advantages and disadvantages of K-line chart

1. Advantages: You can fully and thoroughly observe the real changes in the market. From the K-line chart, we can not only see the trend of the stock price (or market), but also understand the daily market fluctuation.

2. Disadvantages:

The drawing method of (1) is very complicated and it is one of the most difficult charts to make.

(2) There are many changes in the line of Yin and Yang.

Morphological application of k-line diagram

1, head and shoulder type

After the K-line gathers for a period of time, there will be three vertices or bottoms in a certain price range, but the second vertex or bottom is higher or lower than the other two vertices or bottoms. As shown in figure 10-3, it is a head and shoulder top with two shoulders; Or figure 10-4, it is a head-shoulder bottom type with one bottom and two shoulders. However, sometimes there may be more than three vertices or bottoms; If one or two heads (or bottoms) and left and right shoulders appear, it is called compound shoulder type (or compound head-shoulder bottom).

2. Duplex roof

Double top means that when a stock rises to a certain price rapidly, due to short-term profit-taking selling pressure, the trading volume expands, and the stock price falls from the peak, and then the trading volume gradually shrinks with the decline of the stock price. After the stock price stopped falling and rebounded, it began to rise upwards. When it rose to the price near the previous peak, the volume increased again, but it was less than the volume created by the previous peak. The selling pressure of the previous peak reappeared, and the stock price fell again and fell below the neckline, forming a downward trend. The neckline is to draw a parallel line at the low point between two peaks. Because the double top breaks through the neckline after completion, it looks like the English letter "M" graphically, so the double top can also be called "M" head.

3. Double bottom

The inverted state of the double top forms a "W" shape; In other words, the stock price rebounded when it fell to a certain price, but the buyer's power was still not concentrated, and the stock price weakened again, and then the decline tended to ease, and it was supported when it fell to the previous low price. At this time, the buyer's strength increased and the stock price began to show a strong trend. It should be noted that when the double top (or double bottom) appears, it may not always show a reversal trend, and sometimes it will still show a finishing form. After the completion of double top or double bottom, an effective breakthrough can only be considered if the neckline exceeds the stock price by more than 3%, otherwise it may still linger or even reverse the trend.