The idea of the magic 9 indicator comes from the TD sequence of the famous master Tom Dimak in the field of technical analysis. Its core function is to find the inflection point of the current stock price trend and improve the success rate of bottom-sweeping and top-escape. Backtesting shows that the success rate of the Magic 9 indicator based on individual stocks’ top and bottom attempts is 68.6%, and the success rate based on the index’s top and bottom attempts is 75.6%.
The core usage of the magic 9 indicator is to help us effectively identify the turnover point of stock. When the stock price rises 9 during the operation, the stock price is often located in the top reversal area at this time, and there is a high probability that individual stocks will face the risk of reversal and decline. At this time, we reduce the position to avoid risk. When the stock price drops 9 structure, the stock price tends to be in the bottom reversal area, and individual stocks have a high probability to start the trend of stop falling and rebound. At this time, you can consider opening or increasing positions to obtain excess profits brought by the rising stock price.
Remember: Magic 9 works good on daily, weekly and monthly chart, it works on intraday too, but not as accurate as big time frames. We also have to consider the big pic trend and use multi-time analysis first, then use magic 9 to find out sweet entry spot on lower time frame.
When the stock price rises or falls during the 9 consecutive days, the trigger conditions will be met to generate a series of 1, 2, 3 …. 7, 8, 9, and the series will be marked above the K line on the day (below). Only when the stock price reaches the trigger condition for the sixth consecutive day, the series will begin to display, displaying 1, 2, 3, 4, 5, and 6 in sequence, and 7 will be displayed when the trigger condition is still reached on the seventh day. When the trigger condition is reached, the serial number in the previous 6 days disappears. The display logic of the eighth day is the same as that of the seventh day. When the trigger condition is still reached on the ninth day, a nine-turn structure (sequence) is formed. When the trigger condition is not reached on the ninth day, the serial number of the previous eight days disappears, and the nine-turn structure does not hold. The nine-turn structure formed during the rise of the stock price is called the 9-up structure, and the nine-turn structure formed during the decline of the stock price is called the 9-down structure.
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