Teaching You How to Trade Stocks 50: Some Detail Issues in Operations

2007/4/27 8:42:51

Before May Day, we'll stick to stocks. After May Day, we'll resume the normal schedule, continuing with "The Analects" along with topics like 419, bodily fluids, and the like. Today let's discuss some practical issues, because all theory ultimately must be put into practice. And some detail issues in operations absolutely must be clarified.

First, you should be able to view chart data no matter what. Whether the smallest timeframe you can see is 1-minute, tick-by-tick, or even if you can't see anything below 5-minute — these aren't critical problems. Second, any normal software can display MACD. There's one very important issue that many people can't figure out: how to choose which timeframe's MACD to look at. You must understand this principle: due to MACD's calculation method, there's no essential difference between the 1-minute and 30-minute MACD — they just use different calculation periods, and the corresponding calculations are linear, differing only slightly in sensitivity versus sluggishness, without major distinction. The key issue is that MACD is only an auxiliary for comparing strength. Therefore, you first decide which two segments of movement to compare, and then choose whether the 1-minute or 30-minute is more suitable for auxiliary judgment (a matter of sensitivity). For example, if two segments produce very complex MACD bars and yellow/white line changes on the 1-minute chart, but show very clear two areas of bars and standard yellow/white line changes on the 30-minute chart, then of course you choose the 30-minute view. Although since MACD is correlated with K-line prices, 30-minute level trend changes often correspond to 30-minute MACD changes, this cannot alter the sequential principle of first analyzing hubs and trend movements, then selecting the trend segments whose strength needs comparing, and finally using MACD as auxiliary judgment.

The above are minor technical details, but what's more important are some psychological details of operation. In operations, at the beginning, there will inevitably be anxiety about gains and losses. Why must you thoroughly understand the theory? It's to first resolve your own doubts at the root. You need to know why this ID's theory is as rigorously precise as geometry. Otherwise, if you have doubts about the proof that the interior angles of a plane triangle sum to 180 degrees, and you must measure every plane triangle to be convinced, then there will always be a psychological shadow, making normal operations impossible. Theoretical exploration is meant to build confidence in operations. Of course, it's also for achieving precise analysis of movements to guide operations, but its psychological significance is also extremely important. This absolutely must not be based on blind faith — believing in this ID's theory because you believe in this ID means your brain is absolutely waterlogged. Rather, you must thoroughly understand from principles and logic, so you can operate without doubt, without looking before and behind.

Once you have confidence in the absolute validity of this ID's theory for trend analysis and operations, what follows is entirely a matter of improving operational precision. A correct theory, when applied to practice — especially facing the rapidly changing market — will naturally produce very different results depending on the practitioner's experience and psychological state. How to improve operational precision is a matter of long-term practice. But no matter what, this problem can only be solved through actual operations. Otherwise, forever discussing on paper is utterly meaningless.

One very common psychological state is this: you see a buy or sell point, but after buying it still drops, or after selling it still rises, so next time you don't dare try. Among those not yet skilled in operations, this is perfectly normal. Because in the beginning, judgment of buy and sell points will definitely not reach the precision that theory establishes. After all, we're human, and humans always have blind spots and inertia. For example, habitual bulls often buy too early and sell too late, while habitual bears buy too late and sell too early. Even when there's no problem understanding the theory, such habitual forces will cause actual operations to deviate in timing from what theory demands. Changing this habitual force cannot happen in one or two days.

Generally speaking, before applying theory to actual operations, you should first be able to read all past movements and apply theory to analyze existing movements. If you can't even achieve this, then operating in real-time will definitely be chaotic. After mastering this foundational step, you don't need to actually buy and sell yet — you can do some simulation first. The market is open five days a week. Simulate real-time operations, record each one, then continuously summarize based on subsequent movements, discovering problems in your current understanding of theory, and constantly correcting them. Only after simulation operations give you sufficient confidence should you begin actual buying and selling. If you start with real money from the beginning, since the vast majority of people lose their composure when real money is involved, whether operations succeed or fail, they'll get lost in winning and losing while ignoring operational issues.

So, first analyze static, existing charts clearly, then proceed to dynamic, real-time analysis and execution, and finally actual operations — this is the more prudent approach. Of course, this process isn't completed in one or two days. That's why this ID started mentioning some stocks back in late December — at the time, it was to let everyone study with peace of mind. Buy and just hold them there, making money while learning. This ID doesn't need anyone's tuition, but when you actually operate, you might pay some tuition to the market. This ID recommended some stocks for you to hold precisely to prepare the tuition you might otherwise pay to the market. Because ultimately, everyone must rely on themselves, and in the market, paying some tuition first, then continuously improving, and finally applying skills freely — that's all a very normal process.

So keep your mindset steady. Don't spend all day calculating how much less you earned today and such questions. Frankly, if you don't have an effective method, as long as you're in the market, the money you've earned essentially isn't yours — it's just temporarily stored with you. To cultivate yourself into a money-making machine — just like a striker cultivates himself into a goal-scoring machine — everyone learns the methods, but not everyone becomes a sharpshooter. That requires more effort. Market technique needs to be honed. The key is truly mastering the technique. Once mastered, making money becomes a natural thing. Given enough time, it naturally produces enough money. Why? Because this has been guaranteed by this ID's theory with geometric rigor.

Additionally, studying this ID's theory doesn't waste anything else, but those other things can only serve as auxiliaries. You can even listen to tips, chase hot concepts — anything goes — but you must not violate this ID's theory. Why? Because this ID's theory is a direct, true reflection of this market. Violating this ID's theory will ultimately be punished by the market. If you don't believe it, then sell at this ID's theory's first-type buy points and buy at the first-type sell points. Persist back and forth. If you operate at a fairly large level, generally speaking, after N times you'll be able to leave the market. With this ID's theory, even following the crowd and chasing hot plays will have method and rhythm, with the ability to advance and retreat freely.

(To be continued)

Appendix

Today the market broke below 3745 points, so a third-type buy point could not form. The market's oscillation continues, and therefore the sudden rally in the afternoon was a good short-term differential opportunity. The strength of the afternoon's surge should technically be compared with the 04260930 instance. Obviously MACD didn't simultaneously make a new high, so that was an oscillation sell point. Of course, this is all very short-term activity — just using the current example to illustrate how to apply the theory.

Currently, the 5-minute hub above 3745 has expanded into a 30-minute one, range 3720 to 3761. Short-term, it's about the breakout direction of this hub. Although there's only one day before the holiday, that doesn't mean all is peaceful. Before the Spring Festival, the traitors made their move in the last ten minutes of the last day, so the last day's movement is by no means worry-free.

This ID really wants to go out and play right now. Let that one day go wherever it goes — this ID doesn't even want to manage it anymore. The traitors only care about short-term benefits; this ID fundamentally doesn't care about short-term benefits. Still wanting to work on the last day — truly boring.

Weekend — go enjoy yourselves.

Heading out, see you later.

Replies

缠中说禅 2007/4/27 8:45:20

Will append today's market analysis in red as an appendix after the close at 3 PM.

Heading out first, see you later.

缠中说禅 2007/4/27 15:14:36

Today the market broke below 3745 points, so a third-type buy point could not form. The market's oscillation continues, and therefore the sudden rally in the afternoon was a good short-term differential opportunity. The strength of the afternoon's surge should technically be compared with the 04260930 instance. Obviously MACD didn't simultaneously make a new high, so that was an oscillation sell point. Of course, this is all very short-term activity — just using the current example to illustrate how to apply the theory.

Currently, the 5-minute hub above 3745 has expanded into a 30-minute one, range 3720 to 3761. Short-term, it's about the breakout direction of this hub. Although there's only one day before the holiday, that doesn't mean all is peaceful. Before the Spring Festival, the traitors made their move in the last ten minutes of the last day, so the last day's movement is by no means worry-free.

This ID really wants to go out and play right now. Let that one day go wherever it goes — this ID doesn't even want to manage it anymore. The traitors only care about short-term benefits; this ID fundamentally doesn't care about short-term benefits. Still wanting to work on the last day — truly boring.

Weekend — go enjoy yourselves.

Heading out, see you later.