How To View The Price Volume Relationship In The Stock Market?

Don't be trapped.

The relationship between price and volume in stock market is always deified by many professionals as a guiding light for judging market trend.

This not only makes words such as volume rising, shrinkage falling, astronomical price and so on familiar, but also technical experts are complacent with the right to monopolize these words.

Over time, investors have even forgotten the true meaning of price volume relationship, and for new investors, they may not even know opportunities.

Worse still, the rich connotation of these words describing market performance is being interpreted more and more rigidly.

For example, as far as I have heard, the rise of volume often means a large and rising market, which is worth catching. The drop of volume means that the disaster is approaching; the rise or fall of shrinkage is generally described as "wait-and-see" in the mouth of the stock commentators, and the rise in shrinkage is not significant.

Speaking of the relationship between price and quantity, simply speaking, it is the quantitative relationship formed after the paction between the buyers and sellers in the stock market.

Buyers who are commonly known as bulls have cash in their hands, while sellers with short positions are holding shares.

When the buyer buys a larger number of shares at a higher price, the price volume rises. On the contrary, the seller sells a smaller number of shares at a lower price to the buyer and the price falls.

Obviously, the stock market is not only the two simple situations mentioned above, but its changing situation is elusive and grasped. It has also made the investment master and the black and lip interstage performing stage.

This newspaper admired the investment master, opposed to the stock review black mouth.

But we are more willing to say that every investor has the opportunity to become a master in his mind, as long as you spend more time thinking about yourself and others' psychology.

Start with the simplest hypothesis.

There is only one buyer and one seller in the market.

What kinds of situations can a buyer buy from a seller?

First, the price of the buyer is higher than that of the previous purchase, but the stock bought is not as good as expected, which will continue to increase his desire to further buy.

At this time, the two person market will show up in price.

Two, every time the buyer calls the price is higher than the previous purchase price, the stock bought is as expected or even more than expected, and the market performance is increased as the price rises.

At this point, the buyer will soon notice that the seller is happy with his offer and will gradually lower the offer (market performance is likely to reverse).

Three, every time the seller sells a price lower than the previous price, he can't sell his shares more than expected. This will increase his desire to sell the stock in a more substantial way.

At this point, the market will show a price reduction.

Four, sellers shout at a lower price than before, but they sell their stocks very well and even sell more than expected stocks.

At this point, the seller will soon notice that the buyer is pleased with his offer and gradually increases his selling price.

We should see that in the four cases mentioned above, one or three points out that buyers and sellers agree on the trend of price. When the price rises, sellers will not sell and when the price falls, buyers will buy it. Two and four indicate that buyers and sellers have different views on the trend of price.

Of course, our stock market is certainly not a market of only two people, and the relationship between price and volume is far more complex than the above four situations.

In a limited space, we remind investors to pay special attention to the following two factors. These two factors are the key factors, and it is very easy for people to have illusions and misjudgments.

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The first factor is that the number of buyers and sellers in the stock market is very large, and investors do not know who is the same and who is the opponent.

At this time, there will be mutual incentives between the buyers and sellers in their camps. It can also be said that the buyers themselves bid each other to raise the price, and the sellers themselves bid each other to lower the price.

When this happens, the market will show the magnification effect on any trend.

At the same time, if investors only focus on the strength of their own camp, it is easier to ignore the changes in the situation of the other camp.

The second factor is the new admission and the old departure.

I have noticed that in the residential market where I lived a few years ago, the market was uneventful. But when the subway was opened, the vegetables and eggs in the market increased in price.

Because the opening of the subway means the increase in the population of the surrounding communities, and the newly moved residents have become the most important cause of the "rising price" of commodities in the market.

On the contrary, once the population of a large community has moved out of half, it must be a result of "price volume falling".

The reason is easy to understand, but it is a high level requirement for investors to maintain a keen sense of smell, to discover the strength of new admission or to leave the field.

We can do this kind of "word game" here, and it is hard to tell clearly the meaning of each volume price relationship.

But what I really want to exchange with you is to think of investment as bargaining in the market.

Use the experience of your life to perceive the purchase and sale of stocks.

Don't be fooled by the rigidities of "stock comments" in the market. In fact, every situation is interpreted by different people in different ways. It is not others but your own who really influence your judgment.

To sum up, the stock trading assumed in this paper applies to fully competitive buyers and sellers, and this relationship is more likely to happen in large market capitalization stocks.

For those small cap stocks, the price formation mechanism is completely different because they are easily "controlled", thus forming a seller oligopoly or monopoly in the economic sense.

We will discuss this type of stock separately.