How to choose stocks with deviation rate

Deviation rate refers to the degree of deviation between stock price and moving average, and the difference between stock price and moving average is expressed as a percentage. If the stock price is above the moving average, it is positive; If the stock price is lower than the moving average, it is negative.

The key here is to analyze from the psychological point of view of investors. Because the moving average can mean the average position price, which is conducive to negative stimulus, the stock price will rise or fall. The stock price is too far from the moving average, and it may turn short-term anytime and anywhere. The greater the absolute value of the deviation rate, the greater the probability that the stock price approaches the moving average, which is the reason for the trading basis provided by the deviation rate.

From the experience of the sales market, the actual effect of taking the 10 moving average as the base period is better. Taking the decline as an example, the daily deviation rate of 10 generally starts to rebound from -7% to -8%. Considering that the safety performance of this standard value is not high, in general, we should choose a safer admission opportunity between-10% and-1%. Similarly, due to steady progress, short-term stocks can be sold at around +8% at high points.

Deviation rate should be treated differently when using.

1, there should be differences for stocks with different risks. Stocks with guaranteed sales performance and reasonable stock valuation began to rebound when the deviation rate was generally low when they fell. On the contrary, for poor performance stocks, their deviation rate generally begins to rebound when it falls to a large absolute value.

2. The influence of circulating market value should be considered. Stocks with large circulating market value are not easy to be controlled, and the market conforms to the general economic law, which is suitable for the analysis of deviation rate. However, stocks or stocks with small circulating market value are very easy to be controlled, so we should be cautious when applying this index value.

3. Pay attention to the price range of individual stocks. In the trading volume area where the stock price is concentrated at the bottom, the success rate is higher when the main funds are scattered, but after the stock price rises sharply, it is very easy to rise and fall under the control of institutions, and the success rate is relatively low.