First, let's talk about dialectical thinking. Dialectical thinking refers to the ability to observe, analyze, and study things from a materialist dialectical perspective, providing a problem-solving approach and strategy for creative thinking activities from a philosophical height. Dialectical thinking is not only the patent of philosophers but can be applied in all aspects of life. In the stock market, dialectical thinking should also be fully utilized to become a powerful weapon for oneself to be invincible in the stock market.

The Art of War says: "Therefore, the wise man's consideration must be mixed with benefits and harms. Mixed with benefits, and the affairs can be trusted; mixed with harms, and the troubles can be resolved." Only by correctly applying dialectical thinking can one correctly understand the essence of the market's operation and better grasp the future trend of the market.

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Let me tell you a short story: A dog often goes to the temple to look for food. There are two temples in the area, one on the east bank of the river and the other on the west bank. When the dog hears the bell of the monks on the east bank of the temple, it goes to the east bank temple to ask for food; when it hears the bell of the monks on the west bank of the temple, it goes to the west bank temple to ask for food.

Later, when both temples rang the bell to start the meal at the same time, the dog crossed the river to ask for food. When it swam west, it was afraid that the food on the east bank temple was better than that on the west bank temple; when it swam east, it was afraid that the food on the west bank temple was better than that on the east bank temple. The dog swam west for a while and then east for a while, and in the end, it was exhausted and drowned in the river.

Focus on doing one thing well, too many goals will make you confused and end up with nothing. When the stock market's consolidation trend appears, people often participate frequently and lose their direction.

In the analysis of the market trend, people need to use dialectical thinking and fully consider both the pros and cons. In favorable situations, one should see the unfavorable aspects, and in unfavorable situations, one should see the favorable aspects. When the stock market falls, one should understand the nature of the fall, grasp the power of short selling, and explore the internal potential for the stock market to rise, so as to establish confidence in long positions; when the stock market rises, one should establish a sense of risk, understand the unfavorable factors in the market, and avoid the risks that the stock market adjustment may bring. In fact, the daily ups and downs in the stock market belong to the normal fluctuation range, and the occasional irrational rises and falls are precisely the best opportunities for topping and buying low.

Undoubtedly, mentality is a very important factor in the success of investment, but it can only play a role after the investment thinking reaches a certain height. Just like in a Go game, if a stock investor with good psychological quality competes with a professional player, the result is self-evident. Only when the stock investor's skill reaches or approaches the level of a professional player can the importance of psychological quality be reflected.

Hammer lines and hanging lines are both patterns, but they are called differently because they appear in different positions; the hammer line appears after a period of stock price decline, with a certain decline, that is, the bottom of the cycle; the hanging line is the opposite, the stock price has risen for a period, with a certain increase in the relatively high position, and is called the hanging line.

The principle of hammer lines and hanging lines patterns1. Hammer Pattern: After a period of short selling in the market, where prices continue to fall, the selling pressure gradually diminishes while the buying pressure slowly accumulates. On a particular trading day, prices drop significantly, but at the bottom, there is a clear strong desire to absorb, with buyers aggressively pushing the price up, reaching the highest closing price of the day or closing near the highest price. The Hammer pattern, generally occurring in a downtrend, indicates that the market may have bottomed out. If the closing price of the day is higher than the opening price (a red hammer), it is an even more favorable sign for buyers.

2. Hanging Man Pattern: After the market has repeatedly taken long positions, the forces of buyers and sellers reach a balance. On a trading day, the bulls make an effort to push the price up, setting a new high for the day, but they have no intention of maintaining the high position. Prices drop significantly, and the selling pressure is unstoppable. The energy that has been suppressed by the sellers for several days is released in an instant, causing a sharp decline in prices. However, the closing price of the day is still at a relatively high position, close to the highest price, forming a very small real body. The Hanging Man pattern, generally occurring in an uptrend, indicates that the market may have reached a peak, with the bearish candle being more effective than the bullish one.

Buy on the Hammer, sell on the Hanging Man.

Both the Hammer and the Hanging Man are important reversal patterns in candlestick pattern analysis.

They come in two colors and can be either bullish or bearish candles, meaning that both rises and falls can form a Hammer or a Hanging Man pattern.

Their most distinctive feature is the long lower shadow, with a small real body positioned at the top of the candlestick chart, usually with the lower shadow being more than twice the length of the real body.

The Hammer and the Hanging Man have the same candlestick shape, but are called a Hammer when the outlook for the future is bullish, and a Hanging Man when the outlook is bearish.

Technical Points1. Purchasing can be considered when a hammer candlestick appears for two consecutive days.

2. If the market closes with a bullish candle on the following day, and the closing price of the bullish candle is higher than the top of the hammer candle, the likelihood of a reversal to the upside is further enhanced.

3. When a hanging man candlestick appears, it is crucial to wait for other bearish signals to confirm. The larger the gap down between the body of the hanging man and the opening price of the following day, the more likely it is that the hanging man will form the market's top. After the hanging man, if the market forms a black body with a closing price lower than the closing price of the hanging man, this can also be considered as corroborative evidence that the hanging man is established.

Candlestick Reversal Pattern Sharing

Engulfing Pattern (Bullish/Bearish Engulfing Pattern)

Compared to reversal patterns formed by a single candlestick such as the hammer or the hanging man, the vast majority of candlestick technical signals in the market are formed by a combination of several candlesticks. The engulfing pattern is a very typical reversal pattern formed by two candlestick bodies of opposite colors.

Dark Cloud Cover Pattern (Dark Cloud Line Pattern)

The Dark Cloud Cover pattern is also a two-candlestick top reversal pattern, which mainly appears after an upward trend, and in some cases, it also appears at the top of a horizontal consolidation range.In this pattern, the first day is a strong bullish candlestick with a solid body. The opening price on the second day exceeds the highest price of the first day. However, the market closes near the lowest price of the day and the closing price significantly penetrates into the interior of the first day's bullish candlestick. The deeper the penetration, the greater the possibility that this pattern constitutes a top reversal process.

Piercing Pattern (Rising Window Pattern)

The piercing pattern is actually the opposite of the dark cloud cover pattern. It is a bottom reversal signal that appears in a falling market and is also composed of two K-lines. The first one has a bearish candlestick body, and the second one has a long bullish candlestick body.

On the day of the bullish K-line, the market's opening price once fell sharply below the lowest price of the previous bearish line. However, soon after, the market pushed the price back, forming a long bullish candlestick body, and its closing price has exceeded the midpoint of the previous day's bearish candlestick body. This is a very standard piercing pattern.

Case Analysis

Hammer Line:

The first type is that after the appearance of the hammer line, the stock price gapped up on the second day. At this time, the author believes that it is possible to start building a bottom position. The hammer line itself is a bottoming signal, and the high opening on the second day proves the main force's determination to do more. For such stocks, investor friends can start to actively operate, as shown in the figure:The second type, after the appearance of a hammer candlestick, the stock price does not open higher the next day, but continues to be sluggish, yet the stock price no longer sets a new low. The author believes that the best time is 3 days; if the stock price does not set a new low within 3 days after the appearance of the hammer candlestick, it can be confirmed that the bottom signal is established, as shown in the figure:

Hanging Man:

The first type, the day after the appearance of a hanging man, the stock price gaps up and opens, at this time, not only should you not sell the stock, but you can also add to your holdings. This proves that the previous day's hanging man was just a trap set by the main force to lure out the short positions, and it is not a real signal of a top. The stock price is very likely to accelerate the rise, as shown in the figure.

The second type, after the appearance of a hanging man, the stock price opens in the lower shadow part the next day, proving that the probability of the stock price changing from strong to weak is increasing. At this time, you can appropriately sell some of your holdings. Once the stock price breaks through the lowest price of the hanging man, exit in time, as shown in the figure.

Precautions for Hammer and Hanging Man Candlesticks:These two types of candlestick patterns can be both bullish and bearish. When using these two types of charts, it is first necessary to determine that there is indeed an uptrend or downtrend before them, and these two types of charts are located at the highest or lowest point of this trend respectively. After these two types of charts appear, it is best to wait for the confirmation of the next candlestick.

For example, on the daily chart, the day after the hanging man, if the market opens at a lower level, the larger the gap between the body of the hanging man and the opening price of the day after the hanging man, the more likely the hanging man is to form the top of the market. After the hanging man, if the market forms a green body and its closing price is lower than the closing price of the hanging man, then this bearish candle can be used as a confirmation of the trend reversal. The direction of the hammer is the opposite of it.

In actual operation, investors need to pay attention to the following points:

(1) The hammer has a strong signal of stopping and reversing. If a hammer appears on a chart that has been continuously falling and closing with a bearish candle, it is likely to mean that the market will reverse. Investors can try to go long on this stock, and after the market gives further bottom confirmation signals, they can gradually increase their positions.

As shown in Figure 1-1: The chart shows that after the top, it fell almost like diving, until the market closed a hammer, stopping and reversing, and then rising and shaking. In actual combat, after seeing the hammer, you can try to go long, and when the rising and shaking trend further confirms the reversal signal of the hammer, you can gradually increase your positions until the rise is weak and then consider closing the position.

(2) In a continuous bull market, the sudden appearance of a hanging man should be alert, and the market may have seen the top. Compared with the hammer, when the hanging man appears, it needs the verification of other bearish signals, so that investors can safely enter the short position.

(3) If the body of the hammer is white, its bullish significance is more firm; if the body of the hanging man is black, its bearish significance is more firm. In fact, the larger the gap between the body of the hanging man and the opening price of the day after the hanging man, the more likely the hanging man is to form the top of the market. After the hanging man, if the market forms a black body, and its closing price is lower than the closing price of the hanging man, this can also be seen as a proof of the establishment of the hanging man.

(4) After the formation of the top and bottom, the market may rebound in the future, that is, the price tries the bottom of the hammer again, as long as it does not break the lowest position, the bottom-seeing pattern of the hammer is still valid.In practical combat, investors can only accurately grasp the significance of price patterns by combining them with the price changes that occurred before. For example, the day before the hammer line, the market produced an extremely weak candlestick, a long, black, and bald candlestick, which clearly indicates that the market has strong downward momentum; or if the hammer line breaks through the support level established by the market in the past, then the prudent approach to such a hammer line is to wait for other confirmation signals first, to see if the bulls have determined to regain the upper hand, and then act accordingly.

Why do 95% of traders have to be defeated and eliminated by the market?

1. The most difficult thing in stock trading is not stock selection, nor buying and selling, but waiting; the most difficult thing in life is not hard work, nor struggle, but making choices.

2. Downward trends cleanse impetuosity, and upward trends test self-restraint. Stock trading can make us grow continuously, and growth is painful. This pain does not come from the growth itself, but from the fact that we have to face so many changes and unforgettable experiences during the growth process.

3. People with self-discipline in the stock market find joy even in pain; where there is hope, hell is also heaven.

4. In the stock market, retail investors always give up stocks that have not risen and chase those that have already risen high; in life, people always cherish what they have not yet obtained and forget what they already have.

5. The reason for losing money in stock trading is not because of simplicity, but because of complexity; the reason for happiness is not because of getting more, but because of less concern.Investing is not about who is the sharpest in a particular aspect, but rather about who has fewer weaknesses and a more systematic understanding. This is the key point of self-cultivation for investors. So, what are the countermeasures to some common logical fallacies of retail investors?

1. Change of mindset: It's true that you come to the market to make money, but the market is not an ATM; think first about how to control risks and minimize losses.

2. Set stop losses: Everyone knows about stop losses, but big mistakes are still made without them; make setting stop losses as easy and natural as eating and sleeping.

3. Make big profits and small losses: Don't run away with a little profit, and don't cut losses when you lose. Only trade when the profit margin is more than three times the stop loss margin.

4. Trading system: To drive a train, you first need to build a railway. To trade, you first need to establish a system, so stock trading requires a good set of operational standards.

Speculation is a game, and more importantly, it's your own career, which requires continuous effort, dedication, and summarization.

I am looking for a game that is bigger than entertainment and social interaction. I want to become the best in the stock market through my own efforts - this brings me real pleasure and satisfaction. Stock trading is actually a game, and it is essential to win in this game. Good stock traders must be like well-trained professional athletes; they must develop good living habits and maintain abundant physical strength if they want to keep their energy at its peak. Physical strength and energy must be consistent because there is no battlefield more tense and exciting than the stock market.

What drives me is not money; it's a game, a game of solving puzzles, a game of confusing and complicating the greatest minds in human history. For me, passion, challenge, and excitement all lie in winning this game. This game is a vibrant riddle, a riddle with a pun at the bottom, and it is up to me to reveal the answer to all the men and women speculating on Wall Street.In the game, your nerves are pushed to the limit, but the rewards are also very high. My career is trading—namely, following the facts at hand, rather than following what I think others should do.

Let me remind you: Your success will be proportional to the sincerity and loyalty you show in your own efforts, which includes sticking to your own market records, thinking for yourself, and drawing your own conclusions. If one wants to make a living from this game (speculation), they must believe in themselves and their own judgment. No one can make a lot of money by relying on others to tell them what to do.

The stock market is the largest and most complex puzzle ever invented by humans, and those who solve this puzzle deserve the top prize. It takes a person a long time to learn all the lessons from all their mistakes. Some people say that everything has two sides, but the stock market has only one side, not the long side or the short side, but the right side.

Let this general rule be deeply imprinted in my mind, and the time spent is far more than most of the more technical aspects of the stock speculation game. There is only one way to succeed in speculation, and that is to work hard, work hard, and work hard again.