24 basic indicators (16) -- DMA

Parallel line difference indicator-DMA

The DMA indicator is also called the parallel line difference indicator. It is a medium-and short-term indicator in the current stock market analysis Technical indicator. It is often used for the analysis and determination of the index and individual stocks.

Section 1 principles and calculation methods of DMA indicators

I. Principles of DMA indicators

DMA indicators are trend indicators and trend analysis indicators. DMA is a technical analysis index that analyzes the price trend based on the difference between the two moving averages. It mainly calculates the difference between different moving averages in the two benchmark periods to determine the current energy consumption and the future price trend.

Ii. DMA indicator calculation method

The DMA index calculation method is relatively simple. The calculation process is as follows:
DMA = short-term average-long-term average
Ama = short-term average
The following is an example of the DMA index with the benchmark cycle of the 10th and 50th days. The calculation process is as follows:
DMA (10) = 10-50-day average
AMA (10) = 10-day average
Similar to the calculation of other indicators, the selected calculation cycle is different, DMA indicators also include the daily DMA indicators, weekly DMA indicators, monthly DMA indicators, and minute DMA indicators. The daily and weekly DMA indicators are often used for stock market research. Although their values are different during calculation, the basic calculation method is the same. In addition, with the development of software analysis technology in the stock market, investors only need to master the basic principles and calculation methods of DMA formation, and do not need to calculate the index value, more importantly, we use DMA indicators to analyze and determine stock quotations.

Section 2 General Criteria for Determining DMA indicators

I. DMA and AMA values and line direction of motion

1. When DMA and AMA are both greater than 0 (that is, they are graphically indicated to be above the zero line) and move up, it is generally indicated that the stock market is in a multi-headed market and can be bought or held in stock;
2. When DMA and AMA are both smaller than 0 (that is, they are graphically indicated to be below the zero line) and move downward, it is generally indicated that the stock market is in a short market, you can sell stocks or wait and see.
3. When the DMA and AMA values are greater than 0 (that is, they are displayed in graphs above the zero line), but after a long upward movement, if the two move down from a high position at the same time, it is generally said that the stock market is in a low tide, the stock will fall, you can sell the stock and wait and see;
4. When the DMA and AMA values are smaller than 0 (that is, they are graphically indicated to be below the zero line), but after a long downward movement, if the two move up from the low position at the same time, it is generally said that the short-term market is about to start, the stock will rise, you can buy stocks in the short term or hold shares to rise.

Ii. Use of DMA and stock price Curves

Because the DMA indicator has a leading stock price rise/fall function, investors can also use the DMA curve with the stock price curve.
1. When the DMA curve and the stock price curve rise from the low position (the DMA and AMA values are both below 0), it indicates that the short position has weakened, and the long position has begun to accumulate, in the short term, the share price is expected to stop falling and stabilize. Investors should be able to start buying a small number of dips.
2. When the DMA curve and the stock price curve rise from the vicinity of 0, it indicates that the multi-headed force is greater than the short-headed force, and the stock price will go out of a wave of upward rising prices with the cooperation of the transaction volume. At this time, investors should buy at low prices or firmly hold shares to stay up.
3. When the DMA curve fell from a high position, after a strong consolidation for a period of time, it rose to a new high, and the stock price curve rose again after a strong consolidation, it indicates that the stock price is still strong, and investors can continue to hold shares to rise.
4. When the DMA curve is falling from the upper half of the DMA and AMA values, the DMA curve goes up again after a period of consolidation, however, when we fail to reach a new high but turn down, and the stock price curve also falls at the same time, this may mean that the momentum of the rise of the stock price begins to weaken, it will start a round of strong downgrades. At this time, investors should be careful. Once the stock price goes down, they should leave the market in a timely and decisive manner.
5. When the DMA curve and the stock price curve continue to decline from the middle (both the DMA and AMA values are above 0), it indicates that the stock price will continue to decline in the short term, investors should continue to hold the currency to watch or sell at rallies.
6. When the DMA curve is falling in a long-term weak position, after a period of weak rebound, the DMA curve goes down again and creates a new low, while the stock price curve is also hitting a new low after the weak disk is consolidated, it indicates that the share price decline momentum is still strong, and investors can continue to hold the currency.

Iii. intersection of the DMA line and the AMA line

In general, during the overall increase and fall of a stock, the DMA line and the AMA line in the DMA indicator may have two or more "golden crossover" and "Death crossover.
1. When the stock price goes down for a long period of time and the DMA line begins to go up and beyond the AMA line, it indicates that the stock market is about to grow stronger, and the stock price decline has ended and will stop falling up, you can start to buy stocks and create a warehouse in the middle and long term. This is a form of "golden crossover" for DMA indicators.
2. When the stock price is consolidated over a period of time, the DMA line begins to go up and go beyond the AMA line again. When the transaction volume is released again, it indicates that the stock market is in a strong position, the stock price will rise again, and you can add code to buy or hold shares to be raised. This is a form of the DMA indicator "golden crossover.
3. When the stock price rises after a long period of time in the early stage and the stock price increases sharply, once the DMA line breaks down the AMA, it indicates that the stock market is about to change from strong to weak, the stock price will drop sharply. At this time, you should sell a majority of the shares instead of buying them. This is a form of "Death crossover" of the AMA indicator.
4. When the stock price drops for a period of time, and the stock price is not motivated to rise upwards, and various moving averages put a strong pressure on the stock price, once the DMA line breaks down the AMA line again, it indicates that the stock market will enter an extremely weak city again, and the stock price will fall, so you can sell or watch again. This is another form of the AMA indicator "Death crossover.

Section 3 Special Analysis Methods of DMA indicators

I. DMA indicator Deviation

The DMA indicator deviation means that when the trend direction of the DMA indicator curve is exactly the opposite of that of the K-line chart. There are two kinds of DMA indicator deviations: Top deviation and bottom deviation.
When the stock trend on the K-line chart is one-to-one peak, the stock price continues to rise, while the DMA curve and the AMA curve on the DMA indicator chart are at a high one-to-one peak, this is called the top deviation. The top deviation is generally a signal that the stock price will reverse at a high position, indicating that the stock price is about to fall in the short term, which is a signal of selling.
When the stock trend on the K-line chart is lower than the peak, the stock price is falling, while the DMA curve and the AMA curve on the DMA indicator chart are lower at the bottom of the base, this is called low deviation. The bottom deviation is generally a signal that the stock price will reverse at a low position, indicating that the stock price is about to rise in the short term, which is a signal of buying.
Compared with the deviation of other technical indicators, the DMA indicators have fewer opportunities. However, if the DMA indicators deviate from each other in the actual trend, the accuracy of the DMA indicators is higher, investors should pay enough attention to this point.

Ii. DMA indicators

When the DMA line and the AMA line in the DMA indicator are in a high disk or a low horizontal disk, the various forms of crossover are also an analysis method to determine the market situation and decide the sales operation.
1. When the DMA line and the AMA line in the DMA indicator are at a high position and form a m-headed or triple-headed reverse order, this means that the rising momentum of the stock price has been exhausted, the stock price may be reversed for a long time. Investors should sell the stock in time. If the stock price trend curve has also appeared in the same form, it can be more confirmed. The magnitude and process of the stock price decline can be determined by referring to the m head or the three-heavy top and other top reversal forms.
2. When the DMA line and the AMA line in the DMA indicator are at the low position and form a low position Reversal form such as W bottom or triple bottom, the decline momentum of the stock price has been weakened, the stock price may build a medium-and long-term bottom, and investors can build warehouses in batches at low prices. If the stock price trend curve has also appeared in the same form, it can be confirmed that the rise of the stock price and the process can be determined by referring to the bottom W or triple bottom and other bottom reversal forms.
3. The reverse form on the top of the DMA indicator is more accurate than the reverse form on the bottom.

Section 4 practical skills of DMA indicators

The actual techniques of DMA indicators are mainly focused on the DDD (that is, the DMA curve, the same below) in the DMA indicators) the intersection between the curve and the AMA curve, as well as the location of the DDD and AMA curves and their operation direction. The following uses the DMA indicators on analytics' daily parameters (24, 72, 24) as an example to reveal the sale and wait-and-see functions of the DMA indicators. (Note: The daily metric parameters of Qianlong software (24, 72) correspond to those of analyticdb, and are used in the same way ).

I. Sales Signals

1. When the DDD curve on the 24th and the AMA curve on the 7th day are consolidated around the 0-Value Line for a long time, once the DDD curve on the 24th day breaks through the AMA curve on the 7th day, in addition, when the stock price breaks through the long-period moving average, it indicates that the rising momentum of the stock price starts to be strong, and the stock price will rapidly increase. This is a signal to buy the DMA indicator. At this time, investors should promptly buy stocks. (9-1.
2. When the DDD curve on the 24th and the AMA curve on the 7th day are consolidated around the 0-Value Line for a long time, once the DDD curve on the 24th day breaks down the AMA curve on the 7th day, in addition, when the share price falls below the long-period moving average, it indicates that the share price's decline momentum is strong and the share price will begin to drop sharply, which is a sell signal from the DMA indicator. At this time, investors should promptly sell shares. (9-2.

Ii. Currency Ownership Signal

1. When the DDD curve on the 24th day breaks through the AMA curve on the 7th day, the stock price also runs upwards based on the medium-and short-term moving average, indicating that the stock price's rising momentum is still strong and the stock price will continue to rise, this is a signal from the DMA indicator that the stock ownership is about to rise. At this time, investors should firmly hold their shares to stay up. (9-3.
2. When the DDD curve on the 24th day breaks down the AMA curve on the 7th day, the stock price is also suppressed by the medium-and long-term moving average, indicating that the share price is still strong and the share price will continue to fall, this is the currency holding wait signal issued by the DMA indicator. At this time, investors should firmly hold on to the coin.