A moving average line refers to the daily closing prices of a stock, where the sum of the closing prices over several days is divided by the number of days to obtain an average value. This average value, when connected by a line, forms the moving average line, which represents the average price over a certain period of time.

Generally, when the market is falling, the average line gradually levels off from a downward trend. It must first become flat. If the continuous decline shows no sign of slowing down, with prices still being bought one after another in a downward direction, we can only consider buying at the turning point. This requires a higher level of technical skill.

In the normal course of daily operations, this point is generally not chosen. During a decline, each of our entries, if not flat and showing a bottoming state, could be an intermediate process in the downtrend, and it's possible that the price may continue to fall after purchase.

This is why the trading adage "don't catch a falling knife" is often emphasized, which means exactly this principle.

In a continuous line, each of your point selections is a probability fraction during a downtrend, not at an extreme value point. Therefore, in a series of selections, you may enter countless times and be wrong, but you will only be right once, and that is when you buy at the extreme value point. From a probabilistic standpoint, we do not make such choices.

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So it is essential to have a deceleration in the downtrend of the K-line. In terms of energy dynamics, this represents the exhaustion of energy. It is often said that "on the first try, the energy is strong; on the second, it wanes; on the third, it is exhausted." When the momentum of the decline is exhausted, it is better for us to enter the market.

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Focusing solely on the average line, as the decline gradually levels off and the stock price moves upward from below the average line, returning to break through the average line from below. When it breaks through the average line from below and moves upward, we generally consider it a buy signal, also known as the satisfaction point, which is the first buy signal.

So, what is the second buy signal? It is the retest after the breakout.

The third buying point is the aggressive buying method I just mentioned, buying at its turning point, which is generally not recommended for ordinary investors. Therefore, we advocate the second buy.The so-called "second buy" refers to the situation where the moving average line has been declining and then flattens out during its downward process. The K-line combination also flattens out, and the angle becomes less steep. Subsequently, a bullish candlestick crosses the moving average line upwards, which is the moment we advocate for buying.

If it turns out to be a false breakout, and the price retreats back to the moving average line from which we bought, at this point, it's simply a matter of choosing to stop loss, or tolerating a certain range within a period of time. We then make a consideration, and if the price continues to fall, breaking below the previous entry point, we choose to stop loss at this time, with a relatively small stop loss space.

Therefore, whether it's stocks or futures, during the decline of the K-line combination, if a rounded bottom is formed, this combination is generally considered a good buying opportunity.

This buying method is also one that I have been adhering to, known as the "One Line Rule."

I only use the 20-day moving average as a standard for my operations. When my K-line breaks through this line upwards, I buy; when it breaks downwards, I sell. Basically, this can achieve small stop losses. If you are correct, the upward space is significant, thus forming a small stop loss and a large profit-to-loss ratio.

Under normal circumstances, it is difficult to have both at the same time.

On one hand, you have a high success rate, and on the other hand, you have a large profit-to-loss ratio. This state is generally not achievable, and this method is what I have been using in actual trading, called the "One Line Rule."

It's particularly simple, just one line. During the consideration process, the power struggle between different lines can produce a complex result, interfering with each other, which can affect your decision-making in actual trading.

If the "One Line Rule" is combined with this auxiliary chart indicator, it will increase the success rate of the moving average's "One Line Rule." This is the timing for buying based on the moving average.Let's discuss how the stock price behaves during an upward trend, with the moving average line positioned below the K-line. When the stock price falls and breaks through our moving average line, that's when we sell. If it's a false breakout, a fake downward break, and it quickly rises again, the worst that happens is we incur transaction costs, which are our fees and commissions. The maximum loss would be the commissions and a small portion of the stock price difference.

In this scenario, if the stock price breaks down through the moving average line again and then rises above it once more, we can re-enter the market. It's important to note a characteristic in such cases: not every downward break means we sell; and not every rise means we can immediately re-enter. The angle of our moving average line is crucial here—the steeper, the better.

If it tends towards a horizontal, parallel consolidation, it's not advisable to use this method. During such horizontal states, a large number of entry positions are often accumulated, with these positions not significantly different from the cost of the moving average line. Therefore, when some market manipulators or operators are at work, they may use continuous horizontal oscillations, continuous breaks followed by rises and falls, which would increase the number of times you stop losses.

The commission you see for each trade may still be small, but the cumulative effect of many small losses can become significant. So, we must first grasp this point: the angle of the moving average line should ideally be above 45 degrees. When we enter using this moving average line that breaks downward and then stands upward, it is also a buy signal.

Additionally, when our stock price trend line is above the average line and the stock price suddenly falls but does not break through the moving average line, this is a rare buying opportunity. It probes downward towards our moving average line but does not touch or barely touches before quickly rising again. When a small red column appears on the upward movement, we can appropriately increase our position based on the original holding. Thus, the timing for adding to our position is chosen during the upward process when the price retraces without breaking the moving average line, which is where I add to my position in actual operations.

If it breaks this level, I would not add to my position, or the position added would be relatively smaller. So, when the first buy signal breaks through the moving average line and the stock rises, and then continues to rise without breaking the moving average line for a period, and then turns to rise again, this is where I add to my position. Therefore, it is crucial to grasp this well.Similarly, the angle of this certain average line must also be taken into account, and it should not be lower than 30 degrees. This is my method of buying based on the moving average line during actual operations.

Additionally, when the stock price trend line is below the moving average line and suddenly plummets away from the average line, it means that the deviation is quite large.

When there is a significant difference between the existing market price and the actual average price, there is a centripetal force that pulls it back to the center. At this time, when the stock price continuously falls from top to bottom, breaking through positions, the time for me to enter again is when the distance angle between the stock price and the moving average line forms a large price difference. This position is also a buying opportunity.

I have just discussed the four situations for buying based on the moving average line:

1. One is breaking through the moving average line from the bottom up, which is a buy;

2. During the ascent, if the moving candlestick breaks the moving average line and then rises again to break through resistance and stand above the moving average line, this is also a buy signal;

3. After buying, if the candlestick continues to operate above the moving average line without ever breaking it, and during its retraction process, as it approaches the moving average line, we can add to our position at this point;

4. When the candlestick breaks down through the moving average line, due to continuous declines, or when the deviation from the moving average line is too large, there is an opportunity to return to the average line, and we should seize this to buy.

Tomorrow, I will share with everyone the timing for selling based on the moving average line. That's all for today's content, and I welcome everyone to follow, like, and share!