Market Strength and Weakness Principle: Trading Volume Determines Your Trading Strategy
In the trading market, identifying the strength and weakness pattern is the key to success. The market operates under two distinctly different models:
Characteristics of a Strong Market: Continuous Increase in Trading Volume + Clear Main Trend
Characteristics of a Weak Market: Lackluster Trading Volume + Rapid Rotation of Hot Stocks
In these two market states, the strategy for swing trading must be adjusted accordingly. When the market is in a strong phase, one should hold stocks firmly and seize major swing opportunities; whereas in a weak environment, patience is required, with strict control over positions, adopting a "buy the dip, sell the rally" short-term strategy.
The current market faces a critical contradiction: when ordinary investors clearly perceive the market turning strong, they often miss the best entry timing. The prevalence of quantitative trading has led to a weakening of market continuity, posing new challenges to traditional right-side traders.
The most fatal mistake lies in the mismatch between strategy and market condition:
Using Weak Mindset in a Strong Market: This inevitably leads to missed opportunities and selling too early, missing the main upward trend.
Persisting with Strong Strategies in a Weak Market: This is destined to endure frequent rollercoaster rides or even deep traps.
The core wisdom of trading can be condensed into four words: Adjust According to Volume. Trading volume is the most objective indicator for assessing market strength and weakness; it is like the market's pulse, accurately reflecting the true direction of funds.
Remember: Successful trading is not about predicting the market but about responding correctly after understanding the market's language. Save this market strength and weakness principle, and continuously verify and comprehend it in practical trading.
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