Application of golden segmentation law in Stock Market

I. Concepts

The golden division law, also known as the Golden rate, divides known line segments into two parts, so that some of them have a ratio equal to that of the other parts. The expert of Stock Technical Analysis references this law in the stock market, explores the level of stock price changes, and finds that the accuracy is not low, which is one of the main testing criteria for investors to predict future stock price changes.

According to the characteristics of this law, it can provide the opportunity and price for the general trend or individual stocks to be transferred from the short market to the long market or from the long market to the short market. Based on the changes in the current economic environment, as the basis for stock entry and exit.

Ii. Use of golden division rules
　　
The most basic formula of the Golden segmentation law is to divide 1 into 0.618 and 0.382, and then evolve into other calculation formulas based on the actual situation.

(1) "TOP" judgment

When the short market ends and the multi-headed market starts, what is the biggest concern of investors? In fact, there are many factors that affect stock price changes. It is absolutely impossible for investors to grasp the highest price of the rising market accurately, it is to calculate the possible stock price reversal points based on the golden split law for reference during operation.
When the stock price rises, it is out of the low level, from the rising speed and durability, according to the Golden division law, its rise will change when the rise is close to or reaches 0.382 and 0.618. That is to say, when the rise approaches or exceeds 38.2% or 61.8%, there will be a reverse pressure, there is a possibility of reversing the decline and ending a rising market.

In addition to the fixed counter-pressure of 0.382 and 0.618, the golden split law also has half of the counter-pressure points, that is, half of 0.382 is also an important basis. Therefore, when the price rises, to predict the ability to rise the stock price and the price that may be reversed, you can multiply the lowest point of the previous decline in the stock price by 0.191, 0.382, 0.809 and 1, as a prediction of the possible increase. When the rise of the stock price exceeds one time, the counter pressure is calculated by 1.191, 1.382, 1.809, and 2 times. And so on.

For example, when the lowest price of a stock is 4 yuan before the end of a falling market, investors can calculate the price of reverse pressure in different situations in advance, that is: 4 × (1 + 0.191) = 4.764 RMB; 4 × (1 + 0.382) = 5.528 RMB; 4 × (1 + 0.618) = 6.472 RMB; 4 × (1 + 0.809) = 7.236 yuan; 4x(1 + 1.0) = 8 yuan; 4x(1 + 1.191) = 8.764 yuan. Then, consider the actual stock price change.

(2) "bottom" Judgment

When the multi-headed market ends and the short market starts, the biggest concern of investors is where the "bottom" is? However, there are many influencing factors that cannot be fully grasped. From the golden split law, we can calculate the supported prices in progress, increasing investors' confidence in low-price purchases.

When the share price falls, beyond the high-end, from the falling speed and durability, according to the Golden segmentation law, its decline will also change when the decline is close to or reaches 0.382 and 0.618. That is to say, similar to the above-rising market, changes occur when the decline is close to or greater than 38.2% or 61.8%. It is easy to have support, there is the possibility of reversing the rise and ending the decline of the market. Similar to the Golden segmentation Law of the rising market, when the falling market expands, in addition to 0.382 and 0.618, it can play a supporting role at 0.191 and 0.809.

For example, if the maximum price of a stock is 3 yuan before the rise ends, investors can calculate different support prices, that is, 3× (1-0.191) = 2.427 yuan; 3 x (1-0.382) = 1.854 yuan; 3 x (1-0.618) = 1.46 yuan; 3 x (1-0.809) = 0.573 yuan.

In many cases, when the golden division law is applied to the stock market, investors will find that it is used in the overall situation, and the effectiveness is higher than that used in individual stocks. This is because of the strong speculative nature of individual stocks. In some cases, some stocks are prone to sharp increases and decreases, for example, the accuracy of searching for "TOP" and "bottom" using rigid calculation formulas will be reduced. The stock index is relatively better. Although human factors also exist, it is much easier than individual stocks. Therefore, there will be more opportunities to master the "TOP" and "bottom.