Friends who have been watching the market these days should feel a sense of suffocation: although prices haven't dropped significantly, the candlestick patterns are extremely nauseating. In the morning, a big bullish candle lures buyers, and in the afternoon, it falls back to the starting point; in the evening, a big bearish candle lures sellers, and at midnight, it quietly comes back up. This is called 'painting the door.'
1. Why has 'painting the door' been so frequent recently? This is not a coincidence; it is a typical feature of the liquidity exhaustion period.
Depth thin: The current order book is very thin, and the main force only needs a small amount of capital to push the price up or down.
Clearing leverage: The main force does not have enough counterparties to complete large-scale positions or unloading, so their current strategy has changed to 'two-way harvesting.' The rise is to liquidate shorts, and the fall is to liquidate longs; the margin eaten is their source of profit.
2. The deadly trap of this market: The failure of breakthrough trading methods. In a bull market's main upward trend, chasing after breaking key levels is an easy score; but in the current 'garbage time', chasing after a breakthrough is a life-threatening question. You will find that every time the previous high is breached, it often marks a temporary peak, and every time the previous low is broken, it often immediately bounces back. If you are still using traditional 'breakthrough buy' strategies, your face has probably been swollen these past few days.
3. It is a precursor to a market shift. Historical data shows that high-frequency 'painting doors' usually last 1-2 weeks. This is an extreme process of chip exchange. The main force uses this method to wash out indecisive short-term traders and increase chip concentration. Once the painting door ends, what follows is a one-sided big market (usually upward, as the spot selling pressure has been worn away).
Survival rules for dealing with 'garbage time':
Keep your hands steady, quit contracts: Opening contracts in the painting door market will lead to being swept away by stop-losses, while not using stop-losses will lead to liquidation. The best operation is to do nothing.
If you do it, do it with 'grid trading': Since it is oscillating, set the range well and use machines to automatically buy low and sell high. This is the best weapon against the painting door.
Pay attention to trading volume: If the next surge comes with a huge trading volume and does not fall back, that is the signal that the 'painting door' has ended and the main upward trend has begun.
Written at the end: The current market is like a spring compressed to the extreme. It seems dull and torturous, but in fact, it is ready to explode. Don't lose all your chips in the 'painting door' before dawn.