About 70%-80% of the time the market is in an oscillating trend, and only about 20% of the time has an obvious unilateral trend. If the market is in turmoil, investors still trade according to the market concept of unilateral trend, expecting to seize the opportunity of big fluctuations every day, chasing ups and downs with inertia, then it is inevitable that they will step into a trap. The response to the volatile market can directly demonstrate the true level of trading skills.
Why do some investors trade frequently in volatile markets, and then suffer continuous losses?
I think some investors are unable to effectively identify volatile trends because they lack trading skills; some traders do not know that it is best to take short positions and not rush to trade in volatile markets; Investors who trade frequently in volatile markets are caused by their trading habits and trading mentality, such as being restless and always eager to trade.
Therefore, it is very important for trading to identify the volatile market in time. Here are some ideas for identifying volatile markets:
Shock is a tug-of-war market with no direction on the outside and disorder on the inside formed by the evenness between the long and short sides. As shown in the figure below: After the market has maintained continuous new highs or new lows, it no longer continues to make new highs and new lows, but walks out of a narrowing trend. Each subsequent trend is within the previous operation and cannot break through its highs and lows Points generally form a more regular triangle or rectangle.
For example, using the daily chart, today is a big positive line, and tomorrow a big negative line will be closed immediately, making people unable to understand the strength and direction of the market, and if they cannot see the direction of the market clearly, they will lose the basis for entering the market. ;Sometimes, the small doji K-line and spiral K-line are frequently closed, and the price jumps up and down, but the range is very small, and it is in an obvious price fluctuation range. Trading in such a narrow price range is not profitable at all. However, for traders, they have to pay a lot of transaction fees. The overall costs, risks, profits, etc. do not match.
Therefore, if the market goes out of an obvious triangle and rectangle shape, it will be easier to judge the shock operation at this time. Trend traders can choose to avoid directly. We can also use moving averages, MACD and Bollinger Bands to identify them before we get out of triangles and rectangles.
Moving average: When the short-term, medium- and long-term moving averages are no longer arranged regularly, but entangled together, the chaos and disorder mean that the direction is unknown at this time. In many cases, the K-line will go up and down inside these chaotic and disordered moving averages. At this time, it is The oscillating operation started, and then the moving averages will gradually stick together, and then run sideways.
MACD: The fast and slow line of MACD has no obvious direction, and forms an entanglement like the moving average. The value of MACD, whether it is a red line column or a green line column, does not change much every day, and the long and short are unknown. At this time, it is also a shock warning.
As shown below:
Bollinger Bands: The third Bollinger line starts to appear in a bracket shape, and then turns horizontal as time goes by, and the price goes up and down around the Bollinger middle rail. As shown below:
Another biggest feature of the volatile market is disorder and incoherent trends, so it is difficult to grasp and the trading winning rate is not high. Therefore, when we have mastered the skills of quickly identifying oscillating trends, learn to wait patiently until the market is out of the turbulence before trading.
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