Market perception - how to understand the market?

What is the market? How does the market work? Why does the market work like this?

First of all, we need to understand what is the market? The market is all about matching deals. We can only deal at the market price. The k-line chart we see is the trajectory of market prices.

Markets follow trends. In the process of rising, the high point is higher than the previous high, and the low point is also higher than the previous low. The process of falling is reversed.

Why does the market work like this? Here is the point .

Markets are run by people. Some people may say that some people use programmed trading (EA, etc.), and programmed trading is also an automatic trading that people write their own thinking into programs. Unless one day artificial intelligence can understand and perceive the market by itself, and make trading decisions by itself.

Human nature is a person's strengths and weaknesses. In human nature, the disposition effect (see Baidu Encyclopedia for details) is the root cause of the market's trend. Simply put, the disposition effect is to close the position when there is a small profit. If you lose money, you will die. Generally, you will close the position after recovering the cost or carry it to the limit to cut the meat (explode the position). Therefore, after the price breaks through one side, some people are carrying orders, some people take profits to close their positions, and the price pulls back. When the price returns to the original range again, some of the order bearers at better prices will close their positions, causing the price to continue to move in the direction of breakthrough, and the rest of the order bearers will be trapped. Circulation in turn, together means that the price runs with the trend.

There is a very cruel reality, generally (most) the price will not return to the price of the order bearer before the meat is cut.

The reason is that a large number of order bearers have accumulated in a wave of trends. Every time the price moves in a direction that is favorable to (most) order bearers, it will be resisted by a small number of order bearers who take back their costs to close their positions. . Therefore, those who carry orders generally have to cut their flesh. Under normal circumstances, after most order bearers cut their meat, when the price runs without resistance, it is the time when the trend reverses.