Introduction to Securities Trading

Author: Zhang Decun
Publisher:
Publish Date: 2005-07-01
Features:
About the analysis of stock price trends, there are two simple questions. To answer these questions, one must consider from the ordinary and simple aspects:
1. Why do people sell stocks?
Answer: Because they have made a profit.
2. Why do people buy stocks?
Answer: Because they want to make a profit.
Traders emphasize the bullish trend because it is formed under the combined influence of the reason "stocks have been rising" for buying and the fundamental reason for selling "because they have made a profit." New bullish and bearish positions are constantly formed, driving the value of investments up and the market cost evenly upward, forming a trend. This is the fundamental essence of simplifying trends, and its importance cannot be overstated. If one simply says a trend is formed because the stock price is rising, it may be chasing the trend, and it is likely to lead to mistakes and losses.
To understand this meaning, it is worth reflecting on what kind of situation lies behind the stock price rising at a steady and uniform pace, and what principles support this situation. If one carefully considers the scenario of the stock market rising every day in 1991, the reasoning will become clear. Don’t just say, "Oh, that’s due to the trend," but also understand why the trend formed and what the underlying principles are.