Today, let's focus on discussing the "chip peak."

The chip peak is something very useful, yet it is prone to mislead people.

Many people like to judge the main force's direction through the chip peak, but they are not aware of the interpretation of the chip peak, as well as some logic and secrets behind the chip peak.

As a result, many people are misled by the chip peak, taking over at high positions, or even cutting meat at low positions.

To understand the chip peak, one must first understand the technical statistical mechanism of the chip peak, what it is exactly.

The statistical method of the chip peak is the weighted average of the price and turnover rate.

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In simple terms, in the process of the stock's trend, the chip transactions are made into a big data, and then calculate which price has a large chip turnover volume, ultimately forming the chip peak.

For example, a stock fluctuates repeatedly around 10 yuan, then the peak value of the chip peak is likely to be around 10 yuan.

However, here is a key point, or a misunderstanding.

The chip peaks of different cycles will have a very big difference.For instance, the distribution of chips at the daily line level and the weekly line level is significantly different.

The differences become even greater when it comes to the monthly, quarterly, and annual levels.

Some people argue that the distribution of chips at the daily line level is the most accurate, and the larger the time frame, such as weekly or monthly, the less accurate it becomes.

This is because the longer the technical statistical period, the more chips are exchanged, and many chips have already been replaced.

However, the reality is not actually like this.

Let's take an example.

Some stocks have fallen from 100 to 30.

If you look at the distribution of chips, it seems that the chips between 80 and 100 have been consumed over time.

But in fact, the chips that were trapped at that price level are still firmly in place and have not loosened, and there are very few people who have cut their losses.

The distribution of chips is more often able to show the situation of the circulating chips, rather than the situation of some zombie chips.But do not overlook the zombie chips in this part, because when the price returns to that range, the chips will still loosen.

In addition, if you carefully look at the chip peak of the weekly line, you will find some clues.

Many chips that seem to disappear are still there, but they will gradually decrease over time.

This is because the liquidity of that part of the chips has changed, not that the chips have disappeared.

Another key point is that the chip peak cannot count the real cost of the main force, but it can count the real cost of the retail investor.

Many retail investors will look at the main cost through the chip peak.

This behavior leads to the result of incorrectly estimating the main cost.

The main capital in and out, indeed can't escape the capture of the chip peak.

However, the main force will reduce the actual chip cost by high selling and low buying in the process of trading.

That is to say, the average chip cost shown by the chip peak is not the real cost of the main force.Almost all the main forces have actual costs that are slightly lower than the cost at the chip peak.

The actual cost for retail investors is slightly higher than the cost at the chip peak.

Therefore, to better observe the situation of the main forces and predict their intentions, it is necessary to consider a moderate addition or subtraction of costs in the details of the chip peak.

Many real things are hidden behind obvious indicators, unknown to people.

The chip peak is also the same, most retail investors look at the daily chip peak.

The main forces use the chip peak of the minute line to judge the cost of retail chips in the short line, and use the chip peak of the weekly and monthly lines to judge the real holding cost.

Those forgotten chips must be clearly calculated in the process of the main force operating the stock.

Otherwise, halfway through the operation, if a large number of chips appear uncontrollably, the main force will be very difficult to handle.

The use of the chip peak is actually very simple.Here is the translation of the provided text into English:

Mainly focus on the following points:

Firstly, the concentration of chips.

The chip peak can determine the cost price of floating chips and also show the dense area of chips.

Of course, without the chip peak, it is also possible to roughly judge the average chip cost from the relationship between volume and price alone.

However, the statistics of the chip peak are simpler.

The concentration of chips can help us effectively judge the situation of chips in the short term.

When passing through the dense area of chips, the effectiveness of the market trend can be judged.

Secondly, the relationship between the current price and the average chips.

If the current price is higher than the average price of the chip peak, it indicates that the main force is actively doing more.

On the contrary, if the price has been below the chip peak for a long time, it indicates that the main force is passive or deliberately doing less.The strength of capital and the situation of the chip peak can be fully displayed through the average chip relationship.

Of course, capital can also use the chip peak to lure short and long positions.

Therefore, the current price and the average chip relationship should be viewed dynamically, not statically.

Third, the speed of chip change.

This is a very important key point here.

The speed of chip change is the most obvious expression of the main force's intention and is the essence of the chip peak.

Because the change in stock price, driven by the change in volume and price, can display the intention of the main force.

For example, the chip peak price of the previous day and the chip peak price of the next day have obvious changes.

The sudden increase or decrease in average cost is due to the breakthrough and breakage of the volume.

These are all key signals released by the main force on the chip peak, which is a key point of chip change and cost change.If a series of consecutive bullish candles appear, and the profit level of the chips soars from the original 20-30% to 70-80%, that is a prelude to the start.

In the short term, what needs attention is not the static chip peak, but the changes in the chip peak, cost changes, and changes in the dense transaction area.

Fourth, the application of resistance and support positions.

This application is quite extensive, looking at resistance and support positions.

The application of the chip peak in this aspect is actually the same as the application of the moving average.

The so-called resistance and support positions are actually a rough cost area.

When the stock price enters the dense chip cost area, it will definitely generate pressure.

Because many chips are unencumbered, they will reduce positions first, and will also release a part of the chips in the trend.

When the stock price falls to the vicinity of the dense chip cost area, it will generate support.

Because everyone is not making money, the selling pressure naturally decreases, and there will be funds that have not yet boarded the market.The concepts of resistance levels and support levels come into being as a result.

Any indicator is actually a double-edged sword, a reference in investment, but not a must-have.

The main force will not deliberately use the chip peak to deceive retail investors, because the chip peak itself has a certain degree of distortion and will not expose the main force's cost.

More often, the main force uses the chip peak to judge the holding cost of retail investors, and in turn, to peep into the trading situation of retail investors.

Reasonable use of the chip peak can effectively assist us in judging the current intentions of the main force, but do not regard such indicators as a trump card.

Trend is the directional indicator with the lowest error rate in the entire trading system.