In the stock market, if the speculative atmosphere is strong, often under artificial manipulation or profit-sharing stimulus, the stock price can plummet, but there is a limit to the price. The stock price is too far from the equator, there is always the possibility of reversal. So if we are familiar with and able to use the deviation rate flexibly, then we will inevitably increase our profitability, because the deviation rate is a simple but effective method of analysis.
The rate of ionization is called偏离率It is expressed as a percentage of the difference between the stock price and the moving average line, which tells us the size of the difference between the stock price and the moving average line. The deviation can be divided into positive deviation and negative deviation, which is positive if the stock price is above the moving average line; negative if the stock price is below the moving average line; and zero when the stock price is the same as the moving average line.
The deviation rate was first derived from Glanvie's law of averages, and its theoretical basis is mainly analyzed from an investor's psychological perspective. Since averages can represent average holding costs, the deviation rate is negative once the stock price drops sharply, falling below the moving average line. The farther the stock price is from the equation, the greater the negative of the deviation rate, indicating that most investors lose more.
Similarly, when the stock price rises sharply and falls above the equation, the greater the value of the deviation ratio. This means that most investors who buy, the greater the profit, the stronger the idea of investors pocketing for security, will bring great pressure to the stock price, it is easy to cause the stock price to fall sharply. This is why the basis for buying and selling provided by the deviation rate is formed.
The choice of a base period for the ionization rate is very important, and if it is too short, the response is too sensitive. But the choice of a date for the base period that is too long, the response is too sluggish. By comparison, we usually use the 10-day moving average as the best base, because it is neither too sensitive nor sluggish.
[10 日乖离率 = 当日指数（或股价） - 最近 10 日平均数 /10 日平均数 ]*100% 。
The 10-day deviation usually starts to rebound between -7% and -8%, the most common rebound area, which is basically the same as most people understand. But this point is not suitable as an entry point, because this number is often broken and the safety factor is not high. As a prudent investor, we should choose a more secure and reliable point, so we recommend -10% to -11% as the entry time.
The following factors must be taken into consideration when applying the conversion rate in order to improve the success rate:
As mentioned above, the formation of the deviation rate is the result of the instinctive reaction of investors to the stock price fluctuations that produce profits and losses. Generally speaking, the larger the market value of the stock in circulation, the more difficult it is for institutions to control the collection, and the proportion of retailers is often larger, so the more the investor's instinctive response is followed, the higher the success rate of using the deviation rate.
When the stock price is at a low price, the chip is more in the hands of investors, and therefore follows the investor's instinctive response, and the success rate is relatively high. In the high price zone, institutions tend to control the chip well, and stock prices are prone to plummeting under institutional manipulation.
From the actual operation, it can be seen that the better the performance of the stock, the more stable the mindset of the shareholders, the lower the exit rate when the stock price falls, and the more stable the mindset of the shareholders. This is because the mindset of the shareholders is not willing to sell at a low price, and the investors with cash are afraid of missing the opportunity to buy early. While junk stocks often have a phenomenon of a crash, the exit rate when the stock price falls, often when the stock price starts to rebound when the stock price is very negative. This is because when the junk stock falls, investors are not sure what they want, and people who hold junk stocks often have a lot of pain in the process of falling to reduce losses.
The use of the deviation rate should be to buy at low values as much as possible, to reduce the stock at less than high values, without worrying about missing the opportunity. Opportunities exist at any time, we should treat investment opportunities with the utmost caution, no matter how many times we miss our capital is still there, once the loss is caused by haste, it is pointless to regret.
Source: The New Wave blog