Many traders actually find it difficult to understand whether the main force funds are washing out the stock or distributing. These two behaviors look similar but have completely different intentions, leading to opposite conclusions when judging the subsequent trend. Today, we will break down the differences between these two.

First, let's talk about the purpose and intent. The core logic of the main force washing out is to clear out the chips, removing those positions that are not firm enough, whether they are trapped or profitable. Through this round of decline, the concentration of chips in hand becomes higher, and the locking degree is stronger. On the other hand, main force distribution is different; it occurs after a significant profit has been made at high levels. The goal is to convert the chips into cash and secure the gains.

From the perspective of occurrence location, it can also be distinguished. Washing out usually happens at low prices or during the early stages of an uptrend. At this time, the main force is eager to absorb more chips and needs to use oscillations to harvest retail investors' chips. Distribution, however, often occurs after the market has experienced a substantial rise and enters an acceleration phase. At this point, the main force's profit margin is large enough, and they start looking for opportunities to offload.

Looking at the price fluctuations also provides clues. During the washing out process, the overall decline usually does not exceed 20%, and it won't break through key support levels, aiming to keep the chips consolidated. Distribution is different; the decline often exceeds 20% or even more, and the support below is noticeably weak.

The distribution of chips is the most interesting dimension. During washing out, you'll see the chips form a unimodal, dense peak. Regardless of how the price fluctuates, this dense area remains firmly locked, which is called a lock-in state. But if it’s distribution, the chips will gradually move upward, and the positions below will loosen and dissipate. The single-peak dense trading zone actually exposes the main force's cost basis for building positions.

Volume is the most intuitive signal. During the washing out phase, price declines are often accompanied by shrinking volume, indicating insufficient selling pressure in the market. During distribution, volume will significantly increase, showing the main force accelerating to clear out chips.

Mastering these five features will allow you to quickly judge the true intention of the main force at critical moments. This is the most basic but also the most important lesson in trading.