KDJ Index: How to Deal with the Passivation of KDJ Index
KDJ indicator is a technical indicator, which is often used to judge the market. Its advantage is that it is sensitive to future price changes, especially in weekly and daily charts, which can often give clear access opportunities. Generally speaking, the gold cross means buying, and the dead fork means short selling. But no indicator is everything. On the other hand, the sensitivity of KDJ index is its deficiency. The signal of gold cross may often make investors buy goods too early, and the signal of death cross may make investors ship short too early. These two phenomena are what we often call low passivation and high passivation of KDJ index. It is very important to understand the passivation phenomenon of KDJ index for the volatile futures market. In order to use KDJ index correctly, it is necessary to meet the following conditions: futures prices move in a certain range of boxes. In this case, cross-buying low gold and cross-selling high gold has a relatively high accuracy. When KDJ indicator is passivated, it can be identified by the following methods: 1, amplification method. Because KDJ indicators are very sensitive, they often give some miscellaneous information, which is easy to mislead investors, thinking that they will generate buying signals or shipping signals, and make mistakes accordingly. If we amplify it by one level to confirm the reliability of this signal, it will have a good effect. If the low-level gold fork of KDJ indicator is generated on the daily K-line chart, it can be enlarged to the weekly chart. If there is also a golden cross in the low position of the weekly chart, it is considered that the signal is reliable and can be operated boldly. If the weekly chart shows that it is on the way down, then the gold fork on the daily chart is not reliable and may be the main cheating means. At this time, we can take a wait-and-see approach. 2. Morphological methods. Because of the sensitivity of KDJ index, the index it gives is often ahead, so we can help find out the correct trading point by observing the shape of KDJ index. The KDJ index will be restocked when it forms W-bottom, triple bottom and head-shoulder bottom at a low level; In a strong market, when the KDJ indicator forms M-head and head-shoulder top at a high level, the signal reliability of shipment will be enhanced. It is particularly important to note that KDJ, like RSI, has high accuracy for the back pressure line formed after the shock. 3. Wave counting method. The combination of KDJ index and wave counting is a very effective method. On the K-line chart, one wave, three waves and five waves in the rising pattern can often be clearly distinguished. On the K-line chart, futures prices stopped at the bottom of the market and began to rise. Usually, when the first wave rises, the KDJ indicator will signal cross-shipment. At this time, you can pay less attention to this selling signal, because it is likely to be a wrong signal or a cheating signal. When the futures price moves to the third wave, pay more attention to the short signal. When the futures price runs to the obvious fifth sub-wave, if the KDJ indicator gives a selling signal, resolutely ship it. At this time, the signal given by KDJ indicator is usually a very accurate signal. When the futures price has just finished rising and started to fall, the buying signal of KDJ indicator is less considered in the first wave of decline, and the buying signal of KDJ indicator is only considered in the third wave of futures price or The 5th Wave decline, especially after five waves of decline. 4. Trend line method. When futures prices enter a very strong market or a very weak market, futures prices will form a unilateral upward trend and a unilateral downward trend; In the unilateral downward trend, in order to effectively solve the problem of KDJ passivation, a downward trend line can be added to the K-line chart. Before the futures price breaks through the downtrend line, any buying signal sent by KDJ will not be considered. Only after the futures price breaks through the downtrend line will the buying signal of KDJ indicator be considered. In the unilateral upward trend, the market trend is extremely strong, and the futures price often sends a selling signal at a high level. According to this signal, the operator will lose a large section of the market, or an upward trend line can be added to the daily K-line. Before the futures price breaks through the upward trend line, the selling signal given by KDJ indicator will not be considered. When the futures price breaks through the upward trend line, the selling signal given by KDJ will be resolutely implemented and will never be soft. The failure of KDJ indicators often occurs in a very strong market or a very weak market, unilaterally rising and unilaterally falling. At this time, KDJ must be passivated at a high level and passivated at a low level. At this time, it will be cross-purchased according to gold and cross-shipped according to death. It will happen that the market has just started and the KDJ indicator sends a sell signal at a high level. If you follow the signal, you will lose a main rising wave market; The market has just fallen, and KDJ issued a gold fork in the low position. If the stock is purchased, it will be locked up and the price loss will be very large, because the KDJ indicator can be passivated and then passivated at a low level, and the futures price will continue to fall, causing misunderstandings to investors. But no indicator is everything. On the other hand, the sensitivity of KDJ index is its deficiency. The signal of gold cross may often make investors buy goods too early, and the signal of death cross may make investors ship short too early. These two phenomena are also called low passivation and high passivation of KDJ indicator. It is very important to understand the passivation phenomenon of KDJ index for the volatile futures market.