What do you mean by A wave, B wave and C wave in the stock market? Please explain it in combination with the market trend since last year. thank you
wave theory
The fluctuation of stock price is very similar to the tidal phenomenon in nature. In a bull market, every high price will be the bottom price of the latter wave, and in a bear market, every bottom price will be the sky-high price of the latter wave. If investors can size up the situation and grasp the general trend of stock price fluctuation, they don't have to rush around the small fluctuation of stock price, but go long or short all the way with the general trend, so that they can not only seize the favorable opportunity to make big money, but also avoid unexpected risks and stop losses in time. Eliot's wave theory provides investors with an effective tool to judge the general trend of stock price fluctuation.
RaLPH Nelaon Elliot (1871-1948) was the founder of wave theory. He used to be a professional accountant, specializing in the restaurant industry and the railway industry. He was seriously ill in middle age, so he retired in 1927 and lived in California for a long time. During his convalescence, he developed his own stock price wave theory. Obviously, Eliot's wave theory was influenced by Dow's theory, and there are many similarities. Dow's theory mainly gave a perfect qualitative explanation to the development trend of the stock market, while Eliot put forward his original views on quantitative analysis.
Eliot's large number of theoretical papers on the stock market were mainly discovered in 1939. In 1946, two years before Eliot's death, Eliot clearly wrote a monograph on wave theory "NAT re's LSW-the se CNT of the universe". This title sounds a bit exaggerated. This is because Eliot thinks that his stock market theory is a part of the laws of nature, which governs all human activities. Let's focus on his research on the laws of the stock market for the time being.
Many investors who have studied wave theory and put it into practice have found it difficult to understand and even daunting. The basic principle of wave theory is actually very simple, and readers will soon find many key points covered by wave theory. It seems deja vu, because many structures of wave theory are quite in line with the principles of Dow theory and traditional graphic techniques. However, the wave theory has surpassed the traditional pattern analysis technology, which can provide a comprehensive analysis angle for market fluctuations, explain the reasons and opportunities for the development of a specific pattern, and the significance represented by the graph itself. The wave theory can also help market analysts find out where the market cycle lies.
It has been said that most technical analysis belongs to potential analysis in essence. Dow's theory, not to mention all its advantages, does not show the confirmation signal until the trend is formed. Wave theory can further warn the head and bottom, and can be confirmed by more traditional analysis methods. In the following chapters, we will focus on the similarities between wave theory and well-known pattern analysis.
Wave Theory (II) Basic Rules for Counting Waves
Investors should understand that the key of Eliot's wave theory mainly includes three parts: first, the shape of waves; Second, it is the proportional relationship between waves; Third, as the time interval between waves. Among the three, the shape of waves is the most important.
The shape of waves is the basis of Eliot's wave theory, so whether the number of waves is correct or not is very important for the successful application of wave theory to grasp the investment opportunity. There are only two basic rules for counting waves. If investors can stick to these two basic wave counting rules in their usual application, it can be said that they have succeeded halfway.
There are two basic rules for counting waves: First, the third wave (the third push) is never allowed to be the shortest wave among the first to fifth waves. In the actual trend of stock price, the third wave is usually the most explosive wave and often becomes the longest wave. Second, the bottom of the fourth wave cannot be lower than the top of the first wave.
In addition to the above two iron laws when counting waves, there are two supplementary rules. These two supplementary rules are not unbreakable iron laws. They are mainly to help investors better distinguish wave types and help them count waves correctly.
supplementary rule 1: alternating rule, if the second wave appears in a simple form in the whole wave cycle, most of the fourth wave will appear in a more complicated form. In terms of nature, the second wave and the fourth wave belong to the adjustment wave that walks against the current, and there are many seed types in the shape of the adjustment wave. This supplementary rule can better help investors to analyze and speculate on the future development and changes of market prices, so as to seize the opportunity of entry and exit.
supplementary rule 2: the stock market enters the adjustment period after a period of rising, especially when the adjustment wave belongs to the fourth wave, most of it will be completed in the lower fourth wave. Usually, it will end near the end. This supplementary rule is mainly to provide investors with the end point of adjustment, so that investors can understand the strategy of long and short when the adjustment is nearing the end. Do not make investors make a big mistake in direction, and cast an irreversible situation.
wave theory (3) characteristics of waves
In the concrete application of wave theory, it is often difficult to distinguish the market conditions, and several simultaneous wave counting methods are found. Therefore, it is necessary for investors to understand the characteristics of each wave.
after the first wave begins in the whole wave cycle, most investors in the general market will not immediately realize that the rising wave band has begun. Therefore, in the actual trend, about half of the first wave belongs to the part of building the bottom form. Because the first wave usually comes out at the end of the short market, the short atmosphere in the market and the methods used to the operation of the short market have not changed. Therefore, the downward adjustment of the second wave following the first wave belonging to the bottoming category is usually large.
as mentioned above, the second wave usually has a large adjustment range in the actual trend, and it also has a great lethality. This is mainly because market participants often mistakenly think that the bear market is not over yet. The second wave is characterized by a gradual shrinking of trading volume and a gradual narrowing of fluctuation range, reflecting the gradual exhaustion of selling pressure and the emergence of turning patterns in traditional graphics, such as the common head and shoulders and double bottoms.
The third wave The third wave belongs to the main ascending wave in most trends, so it is usually the most explosive wave. Its main characteristics are: the running time of the third wave is usually the longest wave in the whole circulation wave, and its rising space and amplitude are often the largest; Most of the trajectory of the third wave will develop into a rising wave that rises and then rises; In terms of trading volume, the trading volume has been greatly enlarged, reflecting the quantity and energy with rising potential; In graphics, it often breaks through with an unstoppable gap, giving people a strong signal of breaking through.
the fourth wave from the morphological structure, the fourth wave often operates in a triangular adjustment form. The end point of the fourth wave is generally difficult to predict. At the same time, investors should remember that the bottom of the fourth wave is not allowed to be lower than the top of the first wave.
the fifth wave is one of the three driving waves in the stock market, but its increase is smaller than that of the third wave in most cases. The fifth wave is characterized by high market sentiment, and optimism often fills the whole market. Judging from the form and extent of its completion, it often ends in failure. In the operation of the fifth rising wave, the second-and third-tier stocks will have a whim and generally rise, and often the increase will be extremely considerable.
in the rising cycle of wave a, the adjustment of wave a is closely followed by the fifth wave, so most people in the market will think that the market situation has not been reversed, and they are unprepared and only regard it as a short-term adjustment. The adjustment form of A wave usually appears in two forms, flat form and triangular form, and it often exchanges forms with B wave in a cross form.
the rise of wave b is often regarded as unrequited love in many ways, and the rise is more emotional. This is mainly because most people in the market have not yet woken up from the bull market, thinking that the last rise is not over yet, and there are often bull market traps on the chart. From the perspective of transaction volume, the transaction is sparse, and there is an obvious deviation between price and quantity, so the increase can no longer be met.
wave c followed by wave b, because the completion of wave b awakened many market participants and soldiers, and the hope of continuing to rise was completely dashed, so the market began to fall in an all-round way, which was destructive in nature.
Wave Theory (IV) Classification of Waves
One of the basic tenets of Eliot's wave theory is that "the length of time will not change the shape of waves, because the market will still develop according to its basic shape. Waves can be lengthened or shortened during their operation, but their fundamental form remains unchanged. " According to the above theory, compared with a very short-term wave (such as time-sharing price trend), the basic form of a super-cycle wave will follow a certain pattern. The analysis method is similar. The difference is that the wave series involved are different.
In Eliot's wave theory, he divided the wave series in the stock market movement into nine grades, and the data obtained from his research at that time gave different names to the smallest to largest waves. However, the name is actually not important to the work of wave analysts. Generally speaking, the wave of a supercycle can include the trend of several years or even decades. As for microwaves and the smallest waves, they are short-term waves, which need to be analyzed by hourly charts.
From the above discussion, we can draw a conclusion about the wave division of the stock market:
1. The movement mode of the stock price is not simply a straight line, but changes like waves.
2. Push waves or waves related to the main trend can be subdivided into five minor waves, correction waves or waves opposite to the main trend, and three smaller waves can be subdivided.
3. When the eight movements of a complete stock market constitute a cycle (five rises and three falls), this cycle becomes a part of another stock market cycle with a larger level.
4. The shape of waves will expand or contract, but its basic shape will not change with time.
wave theory (5) magic number series
magic number series
1. Fibonacci sequence is the structural basis of wave theory
Eliot, the founder of wave theory, publicly published wave theory in 1934, pointing out that the stock market trend develops according to a certain pattern, and various waves appear rhythmically between fluctuations. The wave theory founded by Eliot belongs to a set of sophisticated analysis tools. 2. The ratio between waves; 3. Time week.
Eliot's second book published in 1946 was simply named Nature's Law. The second important topic of wave theory is the ratio between waves, which actually follows the development of magic number series. Eliot said in his book The Laws of Nature that the numerical basis of his wave theory is a series of series discovered by Fibonacci in the 13th century. Therefore, this series is generally called Fibonacci series.
The magic number series itself belongs to a very simple number series, but the various features displayed in it make people admire the mystery of nature. In fact, as early as the 43rd chapter of China's Tao Te Ching, the true meaning of the magic number series was revealed: "Tao gives birth to one, life to two, life to three, and life to all things." The magic number series includes the following numbers: 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 61, 987, 1597 … to infinity.
The foundation of Fibonacci's magic number series is very simple, starting with 1, 2 and 3, an infinite number series is generated, and 3 is actually the sum of 1 and 2, and a series of numbers that appear later all follow the above simple principle, and the sum of two consecutive adjacent numbers is equal to a later number. For example, 3 plus 5 equals 8, 5 plus 8 equals 13, 8 plus 13 equals 21, … until infinity. On the surface, this series of numbers is simple, but there are endless mysteries hidden behind it.
second, the secret of the square
Hueros Liv, a famous Russian mathematician, once published a research paper report on magic numbers, which revealed many mysteries about Fibonacci's magic numbers, one of which was the secret of the square of magic numbers.
1. Starting from 1, it is possible to randomly select two consecutive magic numbers, the number of which can be unlimited. First, square these magic numbers, and then add the numbers obtained by the square, and the sum must be equal to the last magic number multiplied by the next magic number that appears next.
2. In addition to the magic relationship between the squares of two consecutive magic numbers mentioned above, there is also the magic relationship between the squares of two magic numbers that appear at intervals. The method is to subtract the square of the low magic number from the square of two high magic numbers separated by magic numbers, and the result of the difference between the two square numbers must belong to another magic number. Example: 5× 5-2× 2 = 218× 8-3× 3 = 55 13× 13-5× 5 = 144 ... From the above analysis, it is not difficult for readers to understand that the square also occupies a certain position in the quantitative analysis of wave theory. For example, Yuyuan Mall, a unique stock in the world, soared from its face value in 1 yuan to more than 1, yuan, which happened to be near the square value of its starting price. Can we boldly say that the starting point of Shanghai stock market is around 1, so we will wait for its target of 1 points in the future? !
third, the magic number ratio is the ratio between waves. Frequently appearing numbers include .236, .382, .618 and 1.618, among which .382 and .618 are also called the golden ratio. In fact, the source of the above ratio also comes from the magic number series.
1. In Fibonacci's magic number series, take any two adjacent magic numbers, and compare the magic number in the lower position with the magic number in the upper position, and the calculation result will gradually approach .618. The higher the number, the closer the ratio will be to .618. 2. In Fibonacci's magic number series, any two adjacent magic numbers are selected. If the magic number in the upper position is compared with the magic number in the lower position, the calculation result will gradually approach 1.618. Similarly, the higher the numerical value, the closer the ratio will be to 1.618. 3. If two magic numbers adjacent to each other are divided, the ratios close to 38.2 and 2.618 can be obtained by exchanging the high and low digits respectively. 4. Multiply the two important magic number ratios of .382 and .618 to get another important magic number ratio: .382×.618=.236. The above important ratios derived from magic numbers are .236,.382,2.618 and .5 (of which .236