Teaching You to Trade Stocks 23: Market and Life
2007/1/15 15:50:11
Having discussed so many technical matters, let's pause for one installment and talk about things beyond technique. Technique is only the crudest layer. The same technique, on a purely technical plane, as long as the logical relationships within it are correctly understood, grasping it is not a problem. But the key lies in application — here the differences are enormous. The market is filled with endless temptation and traps, corresponding to human greed and fear. Remaining solely on the technical plane, one is at most a trading machine. Even if in the near term you can obtain certain returns from the market, such returns come at the cost of life's expenditure. No return, however great, can compensate for the expenditure of life. Life — only life can return life. Life is for penetrating life, not for so-called returns that you can't take with you when you're born or when you die.
But there is a type of person who considers themselves above it all, believing that distancing themselves from money and markets constitutes the so-called Way. Pitiable — such people are nothing but worthless confections. Their so-called Way is merely the product of onanism. The Way is not far from people — how could the Way possibly be at odds with the market? Human greed, fear, the market's temptation and traps — how are any of these far from the Way?
In contemporary society, those who don't understand capital markets are fundamentally unqualified to survive, while those trapped within capital markets can only experience a mechanized existence. Contemporary society — capitalist society — however much it can be criticized, constitutes the only realistic existence of the present moment. Of course, you can resist this existence, but all resistance ultimately becomes capitalized, just as the games of moral capital and power capital relate to the game of capital itself. Understanding and participating in capital markets, beyond the petty calculations of catching falling pies from the sky, is more because this capital, this capital market, is humanity's present destiny. All of humanity's greed, anger, delusion, doubt, and arrogance converge here. Without freedom here, how can one speak of freedom? Without liberation here, how can one speak of liberation? Freedom is not escape; liberation is even less escape. Only in this defiled world of five turbidities can there be great freedom, great liberation. Only in the most defiled and turbid place of this defiled world of five turbidities can there be great freedom, great liberation.
Of course, politics is also among the most defiled and turbid places of this defiled world of five turbidities. Those who fail in politics have no right to speak of freedom or liberation. Sexual excess is also among the most defiled and turbid places of this defiled world of five turbidities — those who claim to "sit unmoved by beauty in their arms" have no freedom or liberation to speak of. Those who rise from the mud unstained are merely the products of onanism — since when was the mud dirty? What's wrong with being stained? True freedom, true liberation is to be free within unfreedom, liberated within un-liberation. To enter the mud and muddy it, to leave the mud and muddy it, with no mud to leave yet nowhere without mud, with no mud to enter yet nowhere not mud.
In the investment market, what's ultimately compared is cultivation, character, and insight. Approaching solely from the level of skill, one can at most be a craftsman, never a true master. In ancient times there was the so-called seven-day Chan retreat. In modern society, finding 7 days for a Chan retreat is an extreme luxury. But every week, for one hour, cast off all bonds, cast off all crowds, alone in a room, on a mountaintop, in a river, under the starry sky, in the echoing empty valleys of the wilderness — open eyes that have no eyes, ears that have no ears, look down upon this world, listen to this world. In truth, where is not a room, a mountaintop, a river, starry sky, wilderness? Where are there bonds that need casting off? Within the bloody maw of capital, politics, sexual excess, greed, and fear — there lies the cool ground of freedom and liberation. Of course, if one lacks such insight, one should first seek out one's own room, mountaintop, river, starry sky, wilderness. But ultimately, one must still muddy and defile oneself in the five turbidities of this defiled world — without doing so, there can be no freedom, no liberation.
Replies
缠中说禅 2007/1/15 16:08:06
Everyone should give some applause to those who contributed to pushing Life Insurance to the daily limit today. This ID belongs to the Life Insurance bull camp. The issue of Life Insurance is not purely a stock issue — it's an issue of China's pricing power. Of course, the bears are still quite formidable. The greatest danger lies in the traitors of economics and the economic system. Those who bought Life Insurance at low prices should just hold. There's no need to chase at current levels. The battle between bulls and bears remains fierce. Ordinary retail investors with low risk tolerance absolutely must not chase highs.
缠中说禅 2007/1/15 16:11:30
[Anonymous] 快
2007-01-15 16:07:59
[Anonymous] 沉醉
2007-01-15 00:05:02
Stay calm
2007-01-14 19:47:31
Happy weekend to the blogger and Chan fans!
Judging from your comments, you should be someone from the 80s generation... I'm guessing Chan isn't from your era.
It doesn't matter where you study. Being at a prestigious school is at least better than a backward rural area.
What matters is where your heart is. With such good conditions, just ask yourself what you should do with what you have. What do you want?
Once your mind is at peace, your world will be at peace.
=========================
For most ordinary people, if one can reach a certain level and then achieve "peace of mind," that should be a lifelong pursuit, right? What does Math Girl think?
===
Can what becomes chaotic truly be your mind? When has your mind ever been chaotic? Don't mistake a thief for your father.
缠中说禅 2007/1/15 16:17:45
[Anonymous] 水房姑娘
2007-01-15 16:12:36
Life Insurance and China Unicom have taken over the banner from ICBC — who knows how long this banner can be carried? For us small retail investors, when is it safe to escape?
==
ICBC should not fall. If ICBC falls, it means the first wave of the bull market is over.
缠中说禅 2007/1/15 16:19:40
[Anonymous] 雨中荷
2007-01-15 16:17:34
Hello blogger, hello stock friends!!!
May I ask the blogger — has 000029 Shenshen Real Estate's daily chart already formed two Chán Zhōng Shuō Chán hubs, with the direction being upward, which should be an uptrend? I don't know if my judgment is correct. Please advise, blogger. Thanks in advance!!!
==
A large monthly-level mega hub, seeking to break upward. Third-tier real estate stocks will perform during catch-up phases.
缠中说禅 2007/1/15 16:21:02
[Anonymous] 中间体
2007-01-15 16:16:27
Chan sister, I personally feel that in a certain sense, the No. 3 buy point is very similar to a pullback confirmation after a platform breakout — is that right??
===
Not precise enough — that way many false breakouts would be included. Moreover, not every platform breakout is actionable.
缠中说禅 2007/1/15 16:22:00
[Anonymous] 外科医生
2007-01-15 16:13:21
Thanks, Chan sister.
Also, I want to mention that every evening I now discuss my insights from reading your articles with my mom who's in another city.
Mom studies late every night and has gone through the key articles many times.
==
First study all the various chart patterns well, analyze all the various situations thoroughly. The key lies in grasping them in practice.
缠中说禅 2007/1/15 16:23:37
[Anonymous] 快
2007-01-15 16:12:11
My daughter is two years old. At what age should I start letting her experience your "Weekend Concert"? Also, does listening to this type of music require a minimum standard for audio equipment?
===
Start with Mozart's lighter works. Standard equipment is fine. The pursuit of audio equipment easily becomes obsessive — not necessary.
缠中说禅 2007/1/15 16:29:08
[Anonymous] 外科医生
2007-01-15 15:55:42
Reporting in.
Predicted the rebound, but didn't expect it to be this strong.
Must be the final frenzy, haha.
==
This is a very imprecise way of thinking. What does "last madness" mean? If the last madness refers to the final leg of a bull market, that's still far off. If it refers to the final rally of the first wave, from the Shenzhen Component Index's perspective, even the second weekly hub hasn't appeared yet — how could there be anything about last madness?
Generally speaking, the first wave of a bull market must produce two weekly hubs followed by another rise. Only then is there the possibility of a "last madness." At that time, low-priced constituent stocks will put on a wild show — that's when you need to be careful.
Right now, if you're holding constituent stocks with modest gains, you're holding a money-printing machine.
缠中说禅 2007/1/15 16:34:20
[Anonymous] 雨中荷
2007-01-15 16:32:08
May I ask the blogger — has 000029 Shenshen Real Estate's daily chart already formed two Chán Zhōng Shuō Chán hubs, with the direction being upward, which should be an uptrend? I don't know if my judgment is correct. Please advise, blogger. Thanks in advance!!!
==
A large monthly-level mega hub, seeking to break upward. Third-tier real estate stocks will perform during catch-up phases.
＝＝＝＝＝＝＝＝
Received, thanks blogger!!!
The monthly chart is one large hub, but hasn't the daily chart already formed two upward hubs? I can't confirm so I'm asking the blogger. (Quietly asking — when will third-tier real estate stocks start their catch-up rally?)
===
But two hubs have not formed a trend — they've only formed hub expansion. Only hub new generation can form a trend.
Hubs have three fates: extension, expansion, new generation.
缠中说禅 2007/1/15 16:35:17
[Anonymous] 水房姑娘
2007-01-15 16:32:49
Could Chan M recommend some books that would help a newcomer to the stock market improve?
==
Since encountering Chan Theory, no need for stock market rubbish books.
缠中说禅 2007/1/15 16:36:54
[Anonymous] 中间体
2007-01-15 16:33:07
Chan sister, after the No. 3 buy point appears, when should you make your move? Moving too early risks it going lower (of course then it wouldn't constitute a No. 3 buy point), but moving too late means it might shoot up. This technique is crucial! (Look at smaller level K-lines??) Please guide us, Chan sister!!
==
As said before, the third-type buy point is the sub-sub-level first-type buy point.
缠中说禅 2007/1/15 16:43:25
[Anonymous] 善存
2007-01-15 16:32:24
Aside from slaving away for the bank at year-end and not studying the great works, I've been studying these past few days, just haven't spoken up.
I wonder if Chan sister has any interest in running a private fund? Now should be a great opportunity. If you ever decide to do it, don't forget to let us know — I'll definitely invest. Also, I can recommend a good helper for you. I think he's quite capable.
==
This ID has many private fund manager friends, but this ID has no interest in running a private fund. If this ID wanted to, especially knowing what this ID has done, it would probably break public fund records. This ID now devotes more time to cultural construction and will appear publicly entirely in that capacity in the future.
缠中说禅 2007/1/15 16:48:30
[Anonymous] 猫猫
2007-01-15 16:30:13
A question:
Has the market's 30-minute trend completed itself these past few days?
===
You still haven't understood what "trends must complete themselves" means. At the previous high, using the completeness principle, you'd know the market would certainly pull back one more time. And this pullback, once a first-type buy point appears at this level, will produce another upward assault. The current trend has only two possibilities: 1. evolves into a triangle pattern; 2. breaks through directly. How to judge? Very simple — just see whether divergence appears at the sub-level when approaching the previous high. Once it does, expect another pullback; otherwise, it'll break through directly.
缠中说禅 2007/1/15 16:51:04
[Anonymous] 清
2007-01-15 16:07:55
Study technique, ask questions
Question 1: Could you specify what period moving averages are generally used for short, medium, and long-term averages on the daily K, 30-minute, and 5-minute charts?
Question 2: After a female-on-top position, can the low point formed by the first entanglement (No. 2 buy point) be lower than the No. 1 buy point's price? I recall "this ID" gave a 30-minute Moutai chart example that was exactly this situation. But on the other hand, "this ID" also said that after buying at the No. 2 buy point, once during the rise a male-on-top entanglement appears and the entanglement breaks below the prior male-on-top's lowest point, you must exit (to avoid misjudgment in the buying procedure). Isn't that contradictory? Or is it a risk tolerance issue? Or did I misunderstand?
Question 3: Many stocks today have already recovered Friday's losses, but on the 30-minute chart, many are showing the first entanglement after male-on-top position. So for the upcoming short-term trade sell point, should I watch the 5-minute chart closely for divergence? Or should I combine it with some chart's moving averages?
Thank you！
===
First get the hub concept clear — moving averages are all supplementary things. The hub is fundamental.
缠中说禅 2007/1/15 16:55:48
[Anonymous] 中间体
2007-01-15 16:49:37
Chan sister has never mentioned the role of trading volume. I'm sure it plays a huge role — could you briefly explain its significance??
===
Volume, like price trends, has its own type-based analysis. This will be discussed later.
缠中说禅 2007/1/15 16:58:35
[Anonymous] 小屁孩
2007-01-15 16:29:03
Hello LZ. Could you take a look — aren't these two statements contradictory? Or did I just not understand?
Hub extension and the continuous generation of new hubs with corresponding non-overlapping oscillations forming trends — in these two cases, it's definitely impossible to form a larger-level hub. To form a larger-level hub, the No. 3 approach must be taken: the oscillation around a newly generated same-level hub must overlap with some oscillation range around the previous hub.
---------
Chán Zhōng Shuō Chán Hub Central Theorem 1: Hub extension is equivalent to any interval [dn, gn] having overlap with [ZD, ZG]. In other words, if there exists Zn such that dn>ZG or gn<ZD, then a higher-level hub or trend and its continuation must necessarily emerge.
===
How could there be a contradiction? Just draw it out yourself and you'll understand. If it's not hub extension, then it's hub expansion — meaning a higher-level trend hub is produced; or hub new generation — meaning trend and its continuation.
缠中说禅 2007/1/15 16:59:33
[Anonymous] 是知也
2007-01-15 16:54:09
MM, this year I bought into 600162 Xiangjiang Holdings — I was moved by their head Zhai Meiqing's charitable spirit and entered the stock, but haven't felt any excitement at all. Lost precious time. So frustrated! Could you analyze it for me?
I don't quite understand the concept of a hub — what is the overlap of three consecutive sub-level trend types? Could you be more specific? Thanks.
===
There's a mathematical formula — first get the formula clear.
缠中说禅 2007/1/15 17:00:39
Have to go, see you later.
缠中说禅 2007/1/15 21:25:20
[Anonymous] 插班生
2007-01-15 16:44:58
I've always had a question, please advise, blogger:
Two hubs in the same direction must form to constitute a trend.
For example, after a consolidation (a 30-minute hub), the sub-level (5-minute) movement goes upward. Before a hub forms on the 5-minute chart, this can be viewed as a departure from the hub (30-minute). But after the first 5-minute hub forms, how should one view the current (30-minute) movement at that point?
===
Note — several concepts must be clarified: First, even after forming a 5-minute hub, there's still the possibility of falling back into the original 30-minute hub. Second, departing from the hub doesn't mean the hub won't continue extending — as long as the departure is only sub-level, the next sub-level pullback could still return to the original hub, continuing the extension. Third, the timing of the third-type buy point must be understood clearly — you must confirm that the pullback sub-level doesn't return to the original hub. This can reference that sub-level's first-type buy point.
The distinctions between hub continuation, expansion, and new generation are very subtle. You must seriously and carefully study the mathematical formulas corresponding to all three. Those are the most precise. Before a new hub is formed, all three possibilities for the hub cannot be completely ruled out logically. The brilliance of third-type buy/sell points lies precisely in being determined despite this undeterminability — please understand the subtlety here.
"Trends must complete themselves" is the first principle. If you can't grasp this, everything else will be hard to grasp.
缠中说禅 2007/1/15 21:26:44
[Anonymous] 小溪
2007-01-15 16:41:14
Hello Chan sister! Someone who can truly achieve freedom and liberation — that person is no ordinary mortal. I really want to know, big sis, have you achieved freedom and liberation? If you truly have, then you are the god I revere in my heart!
===
You yourself are Buddha — what do you revere others for? Stop suffocating yourself!
缠中说禅 2007/1/15 21:34:49
[Anonymous] 恒旧常新
2007-01-15 16:58:32
The blogger's Chan-mind is wonderfully ingenious — beautiful! It's just that we stubborn fools find it easy to know but hard to practice. Do you have a remedy?
===
Seeking with a mind of gain and loss, there will never be a day of escape. Knowing yet not knowing, acting yet not acting, not knowing yet falsely knowing, not acting yet falsely acting — why still seek a prescription, seek a talisman? What can be prescribed never leaves you. Leaving you, what prescription would you seek? Seeking your own prescription for yourself — why ride the donkey while looking for the donkey?
缠中说禅 2007/1/15 21:37:48
[Anonymous] 学生
2007-01-15 17:31:51
Seeking purity is what the "mind" needs, to seek the growth of "ability." "Ability" is "heaven," "mind" is "earth" — like the relationship between sunlight and illumination. Seek learning outside the mind; see one's nature within the mind.
===
Mind is seeing, seeing is nature. Heaven and earth are but a speck of dust of your mind — what inside and outside?
缠中说禅 2007/1/15 21:41:10
[Anonymous] 无言
2007-01-15 17:02:19
Chan sister, hello. It's rare you're still here. I'd like to ask two questions:
First, when studying the Analects with you, should I follow the order 1, 2, 3, etc., or can I study from any section?
Second, to track a stock for the medium-to-long term, should I first use the daily or weekly chart to establish the buy point, then look at the monthly chart using hub theory and the principle of "trends must complete themselves" to determine the target price? Thanks!
===
The Analects should be studied in order — otherwise later sections use explanations from earlier ones and you'll have no reference, making comprehension difficult.
As for buy/sell points — first determine the appropriate level based on your capital and actual circumstances, then buy at buy points of that level, and hold until sell points to sell. Not about determining any target price.
Not prediction — just observation and reaction.
缠中说禅 2007/1/15 21:54:53
[Anonymous] yagami0122
2007-01-15 17:03:17
Chan sister, you must know about the "observer" problem in quantum physics, right? When the "observer" participates, the experimental results change.
When Chan sister's Chan Theory is applied like this, the collective observers' "observation" of the stock market will cause the results of this Chan Theory to change. This Chan Theory will also get slapped with an expiration date label~
===
To understand this ID's theory, one must first understand its mathematical nature. This ID's theory certainly has the possibility of becoming outdated, but the prerequisite would be internal contradictions appearing within the natural number system. In other words, fundamental contradictions within the mathematical system itself, causing the entire mathematical system to collapse. Under such circumstances, all disciplines built upon mathematics and utilizing mathematics would also collapse along with it.
缠中说禅 2007/1/15 21:58:00
[Anonymous] Night雨
2007-01-15 18:08:56
Who says women are less than men? Beautiful sister, you are an extraordinary woman. Today's article was metaphysical — I wonder how many people can appreciate your painstaking effort. On the practical side, you also write beautifully. Writing isn't about form but about heart. Though I don't leave comments every day, I read your articles daily and am moved by your tireless guidance. Your level is extremely high, yet you don't put yourself on a pedestal — you sit among us ordinary folks. Also, I have a feeling you must like Wang Xiaobo. What you're doing now, the words you write, carry Wang Xiaobo's legacy. Could you confirm my guess? Thank you.
One more thing — you don't like the worship of Lu Xun. I think you don't actually dislike Lu Xun the person, right? What you dislike is using him as a banner, turning him into a symbol placed on high to attack dissidents. In truth, Lu Xun was just an ordinary person who was frustrated at the vulnerable groups for not fighting back, and could only express it with sharp language. You do it better — for us vulnerable groups in the stock market, you patiently teach us learning methods. Though you remain anonymous, you express your ideals through action. It's moving and worth learning from.
The methods of practice differ, but great love is the same.
==
Sorry, this ID has no interest whatsoever in Wang Xiaobo or any Chinese writer of the 20th century. A century that tore down the House of Confucius is destined to be a barren century.
缠中说禅 2007/1/15 22:00:43
[Anonymous] 水房姑娘
2007-01-15 17:47:30
Before Chan M attained the Way, were there really no books you found deeply beneficial?
==
What comes from books is always shallow.
缠中说禅 2007/1/15 22:17:38
[Anonymous] 逻辑一生
===
This ID does not oppose anyone expressing any opinion, but it's best to first get your own thinking straight.
This person has problems with many concepts — still hasn't undergone the thorough transformation.
Let me pick out a few at random:
Any trend can be decomposed into rise, fall, and consolidation. But if you further subdivide to the smallest two irreducible basic units, namely rise and fall, you can conclude that rise and fall are absolute (especially in the stock market), while consolidation is relative. Uptrends and downtrends constrained by certain definitions such as moving average systems are naturally also relative concepts.
=====
Exactly the opposite: if you stand from a super long-term perspective, any stock is merely a large-scale consolidation. If one must say what's absolute, then consolidation is absolute. However, these concepts of absolute and relative are all muddled concepts with no practical operational significance. Trading is just reaction; reaction is of the present moment — there's no absolute or relative.
With the most basic definitions of rise and fall, we can further define consolidation. Obviously consolidation is a relative concept requiring three or more minimum unit price changes to establish. Similarly, downtrends and uptrends are also relative concepts requiring three or more minimum unit price changes. Moreover, for practical application, through defining different period moving averages, you can derive the MA trend concept constrained by the moving average system. Technical analysis in practice is typically based on the MA system. Therefore, we say trends and consolidation are both relative, and any transition or continuation between uptrends and downtrends must necessarily go through consolidation as a bridge. This is basically consistent with this ID's view, and as this ID has said, it can be mathematically proven.
===
The transition between rising and falling has absolutely no need to go through any consolidation — the most classic example is the V-shaped reversal. Note: consolidation, falling, and rising are all merely results — they're not the crux of the matter. Moving averages are the same — they're just results that can serve as reference, not the crux.
With the above basic concepts combined with chaos theory, catastrophe theory, and mathematical normal distribution and other theories, as long as you're willing to study hard, you should be completely able to construct a technical analysis system similar to this ID's hub theory. And if this system is mathematically precise enough, it can fully explain common empirical descriptions in the market, such as: W/M patterns, ascending/descending triangles/arcs, "the longer the base the higher the space," and even predict and explain the most substantial part of the impulse wave that some people dream of. Of course, these empirical descriptions without the theoretical foundation behind them can never achieve a high success rate.
===
Things like normal distribution all have their logical prerequisites. To use the so-called normal distribution, you first need to prove that the stock market conforms to these logical premises — unfortunately, such a proof does not exist. This ID's theory is an independent axiomatic system, unrelated to any normal or non-normal distribution. This point must be made clear — otherwise one falls into the trap of conventional mathematical treatment of the stock market. Remember: mathematics is not an a priori logic. Any real-world system has its own real-world logic.
缠中说禅 2007/1/15 22:19:01
[Anonymous] 一尘
2007-01-15 20:02:07
Form is not different from emptiness, emptiness is not different from form. Form is emptiness, emptiness is form. Sensation, perception, volition, consciousness are also like this.
===
The sutra is the sutra; you are you!
缠中说禅 2007/1/15 22:22:00
[Anonymous] 淡定
2007-01-15 22:04:48
Hello blogger! Mastering your theory gives us one more tool to overcome fear and greed, and making money becomes a natural result. But your theory is really hard to understand — if possible, could you please explain things even more simply?
====
It's actually already explained quite simply — the logical relationships are very clear. First get the hub's mathematical formula clear, then get hub extension, expansion, and new generation clear, then grasp the various types of buy/sell points. Step by step — careful study and you'll understand.
缠中说禅 2007/1/15 22:32:09
[Anonymous] abc
2007-01-15 21:48:02
Are the type 1, 2, and 3 buy points on 600085's daily chart 2006/11/14, 12/11, and 12/29 respectively? Is that correct?
===
Incorrect. On the daily chart, during this period there are no first or second-type buy points — though there are on the 30-minute chart. However, the week of December 28 is a precise weekly-level third-type buy point. The sub-level pullback for this daily chart is somewhat special, forming a running flat pattern where the B segment's upward thrust is quite aggressive and the C segment's pullback only slightly breaks below the A segment's high. Stocks with this kind of pattern afterward generally exhibit rapid upward acceleration.
缠中说禅 2007/1/15 22:40:08
Too late tonight, signing off. See you later.
Tomorrow's key is watching whether sub-level divergence appears near the previous high, to guard against the index forming a triangle pattern. Also whether the Shanghai and Shenzhen indices diverge — this is also a danger signal. As long as neither of these two things occurs, the broad market has no major problems. Using your own eyes to observe is sufficient — don't predict anything.
For individual stocks, still low-priced stocks — especially those where this pullback happens to form a third-type buy point. Think about why 000600, after pulling back before the holiday, came back with nearly 50% right after the holiday. Setting aside this ID's dream, what matters most is still the power of the third-type buy point. This ID's dream merely gave it more power.
Goodbye.
缠中说禅 2007/1/15 16:02:15
[Anonymous] 手中无股
2007-01-15 15:59:43
LZ, I greatly admire you. What do you think of Qian Zhongshu?
==
You yourself are Buddha — what do you care about Qian Zhongshu?