The old full text was published in Money and Foreign Exchange:
Patience is a virtue, and qualified traders need to wait patiently for market signals 95% of the time. If you are willing to learn trading lessons over and over again, then learning patience is definitely the most rewarding lesson. Most successful professional traders, like crocodiles or snipers, always wait patiently. Once the prey target enters the ambush circle, it will be hit by a blow. They will never waste time and energy to trade some uncertain orders, which is very similar to the process of crocodile hunting and sniper shooting at the target.
The term "long and short position" is interesting. It originated from British economists in the18th century, but it is understandable that it takes much longer to describe the price increase than the price decrease. From the perspective of social development, wealth is value-added, so it is generally suitable for shorting in short-term panic. Long-short energy conversion has a great influence on the price trend in the short-term trading process and is a key factor. This transformation process also needs time to brew. If the implied meaning of bulls/bears holds true with a high probability, then if you want to trade in reverse in the price rising movement, you need more patience than in the price falling movement.
Jack D. Yeshaayahu Schwager, the author of The Grinch of Finance, once said, "There are a million ways to make money in the market ..." This is true. 1 hour chart can also be used to make profits, and 15 minute chart can also be used, but few people say that these charts can be used to trade and maintain long-term profits.
Not everyone can have enough time to sit in front of the computer every day and trade all day. In fact, most people have full-time jobs, maybe only a few hours after work.
The selection of appropriate trading cycle and time-sharing chart directly affects the trading level. Usually, the shorter the time frame, the more detailed the analysis you need to do. You must consider more variables and pay more attention to the trend of the chart, because the price changes quickly.
1 minute chart means more details and more variables than 5-minute chart, and it takes more time to make trading decisions on the basis of more frequent monitoring of graphic requirements. Therefore, if time and energy are very limited for you, in other words, if you often lose money, you should trade in a longer time range, and trading for 4 hours or daily chart only takes a little time to make your important decisions, which will significantly reduce the cognitive load of traders. In other words, you will only lose more before your ability can't match the shorter trading cycle. Usually, if your goal is less than 5 points, then commissions and spreads can destroy your account, while the minute chart is full of these opportunity traps, and excessive trading is self-destructive.
Judging from the trend and fluctuation of the market, there is no absolute advantage or disadvantage in choosing a long cycle or a short cycle. The only truth to test profits is to correctly identify the market and accurately execute transactions. Even so, they have an obvious feature. The long-term trend is obviously different from the short-term trend. The long-term trend is more stable than the short-term trend, or the energy reflected by the long-term trend is stronger than the short-term trend, and it is not as unpredictable as the short-term trend! Only a strong market trend can affect the direction of long-term sports, while short-term sports are relatively vulnerable to the influence of large single transactions brought by some hot money. The charts below 1 hour are almost full of all kinds of noises. Therefore, for beginners, it is correct to focus on long-term trading.
Cognitive Load refers to the total amount of mental work used in work, which is similar to the working memory of a computer, and refers to the amount of information that an individual can consume/process in a given period. Dealing with huge information in a short time, super cognitive load means that you will consume energy at a faster speed, which will have an impact on your trading decision. A shorter trading time frame will prompt traders to take more actions. So the more information you get from the market, the worse it may be for your transaction! Cognitive load can be reduced by training. For example, people who have just started to learn to drive have a heavy knowledge of how to drive, and the knowledge after being relatively skilled is also very heavy. In other words, when you master some skills, it will become like your subconscious mind, and you can do it without thinking at all. It is precisely because of this that when negative emotions touch the subconscious protection mechanism, they will have considerable destructive power to the transaction.
The brain is an important weapon for profit, which needs to be adjusted and channeled. The brain has a lifelong ability, called neuroplasticity, which refers to shaping the structure and function of the brain by regulating the connections between nerve cells. Everyone has the ability to readjust their brains and develop the behavior habits needed for successful trading. Meditation is one of the effective ways to use repetition to update thinking. This is your secret weapon. You can also learn the skills of successful people and change your trading mentality and performance through a lot of practice and positive psychological cognition.
What you need to do is to train your ability to recognize market signals and wait patiently for them to appear before you can consider making the right transaction. However, the number of transactions conducted every day has little to do with your profit. What matters is how you interpret market signals, how to make the right trades, evaluate risks, calculate positions and set stop losses. Every step is related to the result.
According to the different trading cycles, the trading types can be divided into the following categories:
Intra-day trading strategies can be divided into the following three categories:
In the past, scalping was to make use of the time difference of quotations from various systems to make profits. Customers who often make profits in this way are generally unpopular with traders because scalpers trade for a short time. Maybe at this time, you will have closed your position before the foreign exchange market traders contact your order. This is your profit, not the dealer's money.
Whether it is day trading or other high-frequency trading styles, it is necessary to make a feasible trading plan. Strengthen the mentality and physique through training, formulate the range of trading times, the proportion of losses that can be borne every day, week and month, do a good job in capital and risk management, and summarize the daily trading problems. Overcoming excessive trading is a sign that you have lost your mind.
For some people, day trading is a way of quick profit and financial freedom. For those who have never experienced successful trading, day trading is the road to financial disaster, that is, gambling with survival as its essence. The probability of success is like the probability of winning in roulette. In a sense, the probability of any transaction is about 50%, just like flipping a coin. This idea is correct, you can try to improve the accuracy of profit trading, but don't think you are right, it's not true. In essence, short-term trading is more like a random event, which accidentally gets the result that meets your expectations under a probability condition. Don't forget, every transaction has a platform fee, which can be ignored in the long run.
Pay attention to the old transaction records. If the success rate of your trading system is only 10%, you need to choose those opportunities whose risk-return ratio is higher than 1:9, otherwise you are over-trading. However, the higher the risk-return ratio, the lower the success rate, and the qualified transaction is unrealistic. The trading process must also endure many small continuous losses, even the sharp withdrawal of band profits, in order to ensure that we don't miss big opportunities and get enough profits. For example, the turtle trading method, Dennis said that 95% of its profits come from 5% of good orders, and some people have counted that the winning rate of many Wall Street experts is only about 30%.
The question of intraday trading is, how many traders have a profit-loss ratio greater than 1: 1 and a winning rate greater than 50%? Most traders' trading styles and trading systems are not easy to guarantee no losses. When they see the opportunity, they want to seize it, follow their feelings, do whatever they want like masters, and even can't find their own understanding role. In order to make a profit in financial market transactions, fundamental analysis and technical analysis are only the basis, but in actual combat, it is necessary to test the trading ability of the whole person's mental state. Most successful professional traders usually only make familiar varieties. Only when the market characteristics are in line with the high probability of winning, it is possible to consider planning transactions and implement strict risk-return ratio as a filtering condition. Otherwise, you can't bear to do any opportunity, and such traders are basically doomed. Almost all loss-making traders are afraid of missing out, also known as the plight of FOMO outsiders-afraid of missing out. They are afraid of losing profitable trading opportunities.
In this way, for intraday trading, an average of 3 or 5 times a day is already a fairly high-frequency transaction. If you move a dozen or twenty trading opportunities, it can basically be scalpers or automated trading. Therefore, as a day trader, this is not an easy task. Assuming that the transaction time is 12h, it takes an average of 3h to capture an opportunity. However, I haven't been idle during this time. You need to track the market, study and analyze the current price state, and make early planning for the upcoming transaction. After starting the trading plan, you should also make arrangements for the later part of the plan. For example, when a transaction is profitable, it needs to analyze the profit expectation, and where the profit can be grasped to the greatest extent without withdrawing in advance or delaying, which is inseparable from the tracking analysis of the market. In particular, it is necessary to grasp the active time window of the market, because it is impossible for the market to be active all the time. Except for the inactive period of opening and closing, the rest time of major markets in the world is relatively deserted unless there are important economic data and emergencies.
There is also a potential big problem in short-term trading behavior, because intraday trading is basically carried out under the trend of big cycle, so there will definitely be contrarian trading. If contrarian trading goes against both long-term and short-term trends, the risk is great.
The antonym of contrarian trading should be trend following, which is usually called following the trend. This behavior should specifically refer to trend following. The trend is not formed, and no one can predict its existence. When it is formed, it becomes a matter of timing. Generally speaking, the later the trend of participation, the higher the risk. But in general, the risk of following the trend is much lower than that of contrarian operation, because the market needs time for trial and error. Just as no one can predict when the trend will come, no one can predict when it will end. The price trend fluctuates, depending on the opponent's strength and the alliance's strength.
Use stop loss when following the trend to prevent the trend from reversing and ensure that the risk is controllable. Hold positions with a steady attitude, prevent premature termination, and return to small profits, which has nothing to do with victory forever! Unless you choose to temporarily quit at a possible pressure level through rational analysis, you can still follow the price trend to determine the follow-up operation. In this process, we should overcome our emotions, avoid falling into short-term satisfaction, and decide when to quit by combining analysis, instead of being completely dominated by current interests, leading to irrational decisions.
Immature day traders are also facing another serious problem, because the trading system is not mature enough. When the mind can't completely overcome the weakness of human nature, it can't completely follow the system, and it can't continue to find problems and improve the trading system. Especially after a day's rest, can the whole trading system calmly face the first transaction the next day with a sound mind? Still have to go through a struggle every time, let reason and irrationality fight before deciding.
If the first transaction of the day is in the middle of a trend, how to follow up? According to Chris Capres's method, there will be a pulse-like price trend and a corresponding pulse-like correction trend in the trend, so the final position of following the trend is not the pulse process, but the adjustment period after the pulse. Usually, the addition of the adjustment period often gives people the illusion that the trend is over. Is it over? No one knows this. It is because the market is too unpredictable that there will naturally be a correction process behind the impulse zone. And this process is when the trend is followed, the potential position and insurance point is the next stop loss order when it is withdrawn to the right position. The purpose of this is to obtain the continuation of the trend with tolerable losses. This operation needs your mind to calm your emotions, because the correction process in the trend will really make you feel over! Moreover, in such a wrong mood, it may make you irrationally enter the dangerous situation of contrarian trading!
Don't underestimate the role of emotions. If you clap your thighs after every transaction, you should pay attention. Emotions unconsciously control your reason. Humanity is like a fish in water. In which direction the water rushes, it goes against the instinct to swim back and the nature. In order to overcome this problem, we must first face the lost reality. In fact, we must maintain a rational analysis and a confident attitude after the loss. The absence of any one factor will drill holes in our emotions. The so-called follow-up is to choose to overcome emotional barriers, rationally plan transactions, stop losses in such a seemingly dilemma, and make profits from the continuation of the trend! And a homeopathic trade also needs to make a good plan to study whether the possible space ahead is large enough and whether it is worth taking a risk!
Three theoretical hypotheses of foreign exchange limit;
The third assumption is that all the fluctuations in the market are continuous and operated with the idea of calculus. Of course, this is a limit description. Currently, most platforms are gambling platforms. In order not to let us make a profit, they set a price difference and limited the total number of closed orders in a certain period of time. The only purpose of these things is to prevent the third limit, which also explains why there are ultra-short lines and scalping besides long lines and short lines.
Ultra-short-term operation, strictly control profit and stop loss. Many so-called automatic trading software in China do this: operate at a small profit when there is no market, with a profit of 10 point and a loss of no more than 30 points each time. Simulation operation can often reach 90% winning rate! In fact, many manual operations are done in this way, but the rate of return is different.
In fact, this is the multiple theory of fixed stop loss and profit, and it is the winning rate. And many trading strategies use a stop loss of 1 times to strive for 2 times or more profits. In this case, a profit can offset several stops, which seems to be a good deal.
In fact, there are some misunderstandings in this idea, especially for newcomers. The biggest reason, small stop loss, big profit list objectively low winning rate. If it is a trend-oriented document, the problem is callback. The fluctuation law of exchange rate is up and down, and back and forth. Even if it is a trend, there will still be a lot of callbacks to offset profits or even losses, and they often start with a stop loss.
Combined with the principle of unpredictable market, many traders began to trade naked K, focusing on analyzing market signals and simply starting with K-line. All transactions are based on the K-chart, which is an effective means to avoid negative information in the brain. The purpose of the analysis is to master the conversion of long-short conversion energy, analyze the possible behaviors in the market, and then formulate the specific operation plan of the transaction. Therefore, it should be noted that the purpose of analyzing the market is not to speculate on the market trend, but to formulate a reliable trading plan for the transaction.
Chris Capres and Chris Kapoor call it Price Action Context, which is a correlation analysis method of price behavior. Always look at the daily chart, 4-hour chart, 1 hour chart and 5-minute chart. He can tell at a glance whether the price is a trend or a consolidation, and then decide what tools to use. The most basic part of its model is two kinds of behaviors, namely, the rapid movement of prices in the trend and the subsequent consolidation are called impulse &; Correction movement, impulsive price trend and impulsive correction trend. Chris Capres advises traders to actively study the market instead of waiting for the market to form your imagination. If market feedback is an obvious trend, are you still waiting for it to take the form you want? Quickly refer to the trend, try to earn some money, and enhance the thinking mentality of success and confidence.
Chris Capres's method of observing and analyzing the price state from the perspective of human nature is very suitable for the market, because the market is a collection of human nature, and all energy comes from human nature, which leads to the unpredictability of the market. Therefore, on the K-line, sometimes it is human nature to be greedy and impulsive, sometimes cautious and sometimes follow the trend. It can be said that each trading product has its own specific personality. On the basis of two basic concepts of Chris Capres, I want to add a concept called platform stage. Impulse price trend can be understood as a relatively significant trend performance, and the result of this performance is to move the price to a target area, that is, the platform. The biggest difference between it and the impulse correction trend is the difference in energy. The process of impulse correction is short-term, while the platform is a relatively long-term price fluctuation trend. My idea is that the trend is completed by pulse price trend and pulse correction trend, and the platform stage is the node connecting all trends. If I want to study a set of K-line analysis theory, I must name it K-personality, which has only three basic states and two forces:
Many ways have only one purpose, to open a position at a low price, push up the price and then hand it over to the empty side to open a position or close the position. Short position itself is the transformation form of power, from short position to long position, which can also be called short position, because their closing action is to buy more products under the guidance of many forces! Short positions used to close positions are traders who are trapped in the contrarian trend, and those short positions that are opened are cheaper than those that are closed. Similarly, the purpose of the empty side is the same. Under the leadership of the short side, the bulls either endure the current losses or stop selling. The long-term liquidation behavior has realized the transformation from long-term power to short-term power, and the market has formed the phenomenon of killing more. This reversal of power from their respective camps is also one of the reasons for the impulsive price trend mentioned by Chris Capres.
The balance or weakening of long and short forces may lead to chaos, but chaos is often caused by the caution of bulls or bears. Usually, the graphic leader points to the weaker side, but it doesn't mean that the price trend will follow the other side. These are two different things. K-type personality will be confused because every time you go forward, the environment you encounter is brand new, and how far you go forward is uncertain. Repeated temptation is a security mechanism. There is inertia in progress. Don't try to stop the reverse collision before it. It is easy to be knocked down by contrarian operation. It is not very reliable to guess when the runner will suddenly stop. Compared with walking slowly, walking fast consumes more energy, and walking slowly is a manifestation of accumulating energy. According to people's nature, they tend to choose the nearest small interests rather than the long-term big interests, and it is not natural to delay enjoyment. When the immediate interests suddenly enlarge, then there is more impulse to accept. Impulsive price movements will weaken both multi-party and empty energy, which is also a reason for the subsequent callback trend.
This principle means that there are two main reasons for stop loss, one is contrarian trading, and the other is wrong timing. It is inevitable to stop the loss against the trend. The wrong opportunity will lead to the stop loss being hit by tentative fluctuations or not trading at the best price position. Before you fully understand the trend, restrain yourself from moving, and wait until everything is clear before waiting for an opportunity to follow suit. This is the best operation. Otherwise, you are betting on the probability of 50:50, either according to your own ideas or stop loss. This idea itself is correct, but its mistake is that this trading strategy is stupid, or at best unwise, not a strategy at all, because rationality is impossible.
In the loss experience, most of them are caused by chaotic trading, and the stop loss caused by wrong timing is much less than that caused by contrarian trading. Therefore, it is extremely important to correctly judge the trend as the first step of the trading plan. The summary of experience gives the answer. In the volatile market, the plight of outsiders will strongly amplify the negative emotions of a day trader, ignoring the correctness of the trend and the size of the follow-up space, thus entering a chaotic trading state and irrational operation.
Time sequence identification is the most challenging place. You should be able to combine a familiar indicator with the price trend, analyze the market signal given by the current price trend, and then decide to do the corresponding operation as planned. And this operation refers to the ability to execute and analyze signals, and the corresponding execution is a complete transaction.
Following the trend is an art. It is necessary to set a stop loss at a suitable position and track the position at a reasonable price in the case of profit to prevent profit taking. When the market is always in trouble, you have to guard against it! Among them, you are not idle. As a day trader, you must always pay attention to the price trend and analyze the possible impact of key positions on the price trend. This kind of predictive analysis will make you confident in the process of following the trend! The price may be adjusted according to your idea, or it may break through your take-profit price, and you will definitely have a better response!
Trends always go forward in twists and turns, and when they come back, they test your ability most, especially for traders who have no experience in trend tracking. If you can't overcome it, if you are misled by your love for instant enjoyment, you will never be able to follow the temple of trading. I walked on this road. I was completely unaware of the power of negative emotions. Temporary losses or small gains in trading are difficult. But when you realize this problem, you will have the energy to overcome it, and consciousness is an energy. Now, I prefer to follow the trend, even in the pressure position, which sometimes produces a stop loss, but it is correct. Because the correct stop loss will make you reflect on why you didn't correctly analyze the signal behind the price trend and can't understand the real trend? The promotion of this kind of consciousness is the source of the progress of trading technology. When you can tolerate the temporary loss caused by the fluctuation of the trend, the real trend will definitely give you a longer-term return. Unless you haven't identified the real trend, or you haven't executed the trading plan correctly.
Every trader needs to determine his own trading style, because each method has its own scope of adaptation, and it is necessary to realize that different trading strategies cannot be confused. The same method cannot be applied to all trading methods, even if different products use different trading methods. For traders, there is nothing worse than losing money in profitable transactions. It is a typical mistake to change the original short-term trading into long-term trading because of profit, that is to say, two sets of methods are used in the same trading plan.
Qualified traders should have their own familiar products as the main trading tools, not everything involved and nothing thoroughly studied. For example, you can choose one or two currencies, an index, or gold and silver, which are interrelated products. Gold and currency have a certain mutual reference. Usually, gold as a hard currency is a very important reference. When the money in society is over-developed, people usually convert it into gold in order to preserve the value, which makes the price of gold rise and the corresponding currency depreciate.
In Chris Capres's model, there are some advanced contents as online courses for master trading classes. The online course explains his own time frame, price model analysis, trading psychology, position management, risk management and so on. , and also deal with trading volume trends and non-trading trends vol&; Non-Vol trend analysis, which I am more interested in. Part of the content directory is as follows:
You need to use basic trend analysis, resistance/support level analysis, and you can use the marking tool to mark the K line. It doesn't need to be drawn accurately, just to let you know that this is a trend or pressure position. It is a simple oblique straight line segment and horizontal line segment, which represents the price trend corresponding to time. Note that the unpredictability principle of the market tells you that you can't draw the future trend line and pressure line of the market completely and accurately, you can only estimate its possible position.
At first, you may not be sure about the position of the pressure line, because the market is always changing and the market is a dynamic process. The resistance level or trend formed today may be rewritten by the market tomorrow. To attack the market accurately, you need to constantly optimize the support/resistance level, live in the present, always take the present as the standard, overthrow the views that may be correct in the past, and build a speculative foundation with new reality. The common practice is wired in the heart, wireless in the figure and wireless in the high-order tolerance heart.
When the market enters the adjustment period, the support level and the pressure level will have different trading opportunities. Usually, buying and selling near the support level or resistance level is an alternative. However, there are usually many traps here. The original support level may become a new resistance level, and the original resistance level will become a new support level, and the position will indeed change. If it is safe, it is necessary to continue to observe the relationship between supply and demand in the market during this period, and both long and short sides will eventually choose a direction from here.
The author of the three ducklings trading system is named Captain Coin, who started his trading career as early as 1997. The content is as follows:
Candle chart originated in Japan and was originally used to record the price of rice market. After it developed into a K-line, it recorded four price information OHLC—— in a period of time-opening/high/low/closing. The market is full of analysis of the K-line shape, but note that the K-line is only a superficial phenomenon and a reflection of the current market state. The misunderstanding is that many people use the K-line form as the basis for speculating the market trend, which contradicts the principle that the market is unpredictable. Therefore, many people are keen to obtain market trends through K-line analysis, which in itself will provide a feedback to the market, and this feedback itself will reappear through the K-line form, and the final analysis is still an unrecognizable appearance.
However, the trend of the market will not change because of these false feedbacks, which will only increase the fluctuation of the market trend. Price fluctuation. On the deeper level of the market, it shows the relationship between quantity and price. All technical indicators based on the relationship between quantity and price are also based on this fact, and the market phenomenon is presented to traders again after being packaged by mathematical models.
In the trading world, people are obsessed with buying and selling at the ideal bottom and top. This kind of outsider's dilemma that enlarges the mentality can easily lead traders to open positions prematurely or be eager to make profits. At 1970, a booklet called Trader's Notebook compares the most famous commodity trading systems. People find that the most successful trading system is the four-week rule developed by Richard Donchian. Later, in the Financial Review, the data collected by 1976- 1986 were extensively studied, and 23 technical trading systems were compared. The conclusion is that channel breakthrough (four-week rule) and average crossing system are in the leading position in generating sustainable profits.