The Eight Granville Rules is a very important tool for stock analysis. Making good use of the Eight Granville Rules can help us make more effective profits. Now let's introduce what are the eight principles of Gladwell.
Granville, an American investment expert, invented the moving average in the middle of the twentieth century. As a tool to track trends, the moving average soon became popular all over the world. Today, both technical analysts and basic analysts regard the moving average as an important reference tool for judging trends. Among them, the eight principles created by Gladwell can be regarded as the essence of the moving average, which has always been regarded as the treasure of technical analysis by average users. And the moving average, especially the eight principles of Granville, also gives full play to the essence of Dow theory.
1. After falling all the way, the moving average gradually turns smooth and shows signs of rising. At this time, the stock price also turns upward and breaks through the moving average from the downward direction, which is the first reference buying signal.
2. The stock price is above the moving average and starts to fall after a period of increase. After falling below the moving average, it suddenly turns up and breaks through the moving average. This is the second reference buying signal. The key to the second buy signal is that although the stock price is down, the moving average is still up.
3. After a rise above the moving average, the stock price fell again, but did not fall below the moving average. Here the moving average is still on the rise, and the stock price also turned down to rise, which is the third reference buying signal.
4. After a period of rise, the stock price and the moving average decline at the same time, and this decline is large, far away from the moving average, indicating that the stock price is likely to rebound in the short term, which is the fourth reference buying signal.
Buying 4 is loved by many short-term customers, but remember not to be reluctant to fight, because the general trend is already bad, and a long fight is bound to hold.
The selling rule of the eight Granville rules has the following four points:
1. The moving average turned from rising to flat, and turned into a downward trend, while the stock price also fell from above, falling below the moving average, and selling 2 was the second reference selling signal.
2. Both the stock price line and the moving average were disappointed to continue to decline, but still rose. After breaking the falling moving average, they continued to turn around and fall. Selling 3 was the third reference selling signal. The key point of the third sell signal is that although the share price has risen and broken the moving average, the moving average is in a downward trend.
3. After a wave of decline, the stock price rebounded again. The slightly rebounded stock price was more weak and could not break the moving average again. Although the stock price rebounded, the average was still down. Selling 4 was the fourth reference selling signal.
4. Sell 1 is mainly a reference sell signal after the stock price rises sharply. Its stock price rises far more than the moving average, which is also rising. After the sharp rise, there is likely to be a sharp fall. Therefore, sell 1 is the first reference sell signal to prevent unnecessary losses caused by the sharp fall.
The eight rules of Granville should roughly follow the following rules: when the average rises, it is a buying opportunity, and when it falls, it is a selling opportunity. When the average turns from down to up and the stock price breaks the average from below the average, it is the best time to buy. When the average turns from up to down, and the stock price falls below the average from the average, it is the best time to sell.
