What is the golden ratio?

The golden section law, also known as the golden section ratio, is to divide a known line segment into two parts, so that the ratio of one part to the whole is equal to the ratio of the rest. Professionals of stock technical analysis apply this law to the stock market, discuss the high and low points of stock price changes, and find that the accuracy is not low, which has become one of the main test criteria for investors to predict the completion point of future stock price changes.

According to the characteristics of this law, it can provide opportunities and prices for the general trend or individual stocks to change from short to long or from long to short, and serve as the basis for investors to enter and exit stocks according to the changes in the economic environment at that time.

Second, the application of the golden section law

The most basic formula of the golden section law is to divide 1 into 0.6 18 and 0.382, and then change it according to the actual situation, and then evolve into other calculation formulas.

(A) "high-level" judgment

When the short market ends and the long market begins, the question that investors are most concerned about is where is the "top"? In fact, there are many factors that affect the stock price change, and it is absolutely impossible to accurately grasp the highest price of the rising market. So what investors can do is to calculate the possible stock price reversal point according to the golden section law for reference when operating.

When the stock price rises from the low level, according to the golden section law, when the rising range approaches or reaches 0.382 and 0.6 18, its rising range will change. That is to say, when the rise approaches or exceeds 38.2% or 6 1.8%, there will be back pressure, which may reverse the decline and end a round of rising market.

In addition to the fixed 0.382 and 0.6 18, the golden section law is also an important basis, and there are also half back pressure points, that is, 0. 19 1. Therefore, when the rising market is unfolding, to predict the rising ability of the stock price and the price that may be reversed, the lowest point of the previous stock price decline can be multiplied by 0. 19 1, 0.382, 0.809, 1 as the prediction of the possible rising range. When the stock price rises more than 1 times, the back pressure points are calculated as 1. 19 1, 1.382, 1.809 and 2 times. And so on.

For example, when the lowest price of a stock before the end of the downtrend is 4 yuan, then when the stock price reverses and rises, investors can pre-calculate the counter-pressure price in various situations, that is, 4× (1+0.191) = 4.764 yuan; 4×( 1+0.382)=5.528 yuan; 4× (1+0.618) = 6.472 yuan; 4×( 1+0.809)=7.236 yuan; 4×( 1+ 1.0)=8 yuan; 4× (1+1.191) = 8.764 yuan. Then, according to the actual stock price changes to consider.

(B) "Bottom" judgment

When the bull market ends and the short market begins, investors are most concerned about where the bottom is. However, there are so many influencing factors that we can't fully grasp them. From the golden section law, we can calculate the support level in the process of falling, and increase the confidence of investors to buy on dips.

When the stock price drops out of the high grade, according to the golden section law, when the falling range approaches or reaches 0.382 and 0.6 18, its decline will also change. That is to say, similar to the rising market, it changes when the falling range approaches or exceeds 38.2% or 6 1.8%. It is easy to support, and it is possible to reverse the rise and end the decline. The formula of the golden section law is the same as that of the rising market. When the downtrend spreads out, it may play a supporting role at 0. 19 1 and 0.809 except 0.382 and 0.6 18.

For example, before the rally ended, the highest price of a stock was 3 yuan. Then when the stock price reverses, investors can calculate various support prices, that is, 3× (1-0.191) = 2.427 yuan; 3× (1-0.382) =1.854 yuan; 3× (1-0.618) =1.46 yuan; 3×( 1-0.809)=0.573 yuan.

In many cases, when the golden section law is applied to the stock market, investors will find that it is more effective to judge the general trend than to use it in individual stocks. This is because individual stocks are highly speculative. With the intervention of some operators, some stocks are prone to ups and downs. In this way, the accuracy of finding the "top" and "bottom" with rigid calculation formulas will be reduced. The stock index is relatively better. Although there are human factors, it is much milder than individual stocks. So the chances of mastering the "top" and "bottom" will be greater.