Trading with the trend, as the name implies, is to buy and sell along the current trend.
If the current trend is up, buy to open a position, and if the current trend is down, sell to open a position. Although there is no problem in the understanding of homeopathic trading, this is only the superficial meaning of homeopathic trading. In actual trading, this is not easy to do. Because there are many uncertain factors in it, that is, the analysis and judgment of the trend.
The same trend has different views on different traders. Secondly, there is also a big difference in the level of choice to follow the trend. Some traders like to follow the trend of large scale, while others like to follow the trend of small scale. Moreover, homeopathic trading also has its drawbacks. The biggest disadvantage of trading with the trend is that it will lead traders to chase ups and downs. Because some traders see the trend relatively late, by the time they see the trend clearly, it may be the late stage of the trend development, which leads to the situation of traders chasing up and killing down, and chasing up and killing Falling is also a big trouble.
However, no matter whether you agree with trend-following trading or not, it is indeed one of the most commonly used trading methods in the speculative market at present, whether it is abroad or at home. Because trading with the trend is closer to one side of the market, and the development of market trends often has a process, but some processes are short and some are long. The direction of trend research is to study the current market dynamics and understand what the current market is doing. The winning rate of standing on the side of the market is often relatively large. At least I can think that the market will not change its current direction of movement frequently and suddenly, which is the inertia of the trend.
And contrarian traders rely on the long-short transformation of the market. They believe that after a period of uptrend in the market, there will inevitably be a period of downtrend. This is why they approve of trading against the market. However, what they may not have thought is that a mainstream trend will not be easily changed, especially a large-scale trend.
For example, in a short-term upward trend, the price rises by 100 yuan, but the strength of the subsequent short-term downward trend is generally difficult to reach 100 yuan, or even 50 yuan. And if the market itself is in a big bull market, the short-term downward trend may end soon, which makes it more difficult to grasp, and the risk-reward ratio is not good. However, what if you follow the big trend and go against the trend of small levels? This is enough to give it a try, and many masters will also use this method to open positions. However, you must pay attention to using this, and you must not continue to increase your position in the event of a loss.
For most traders, trading with the trend is still acceptable. But there are some differences in some details, let's see how we should follow the trend.
how
Judge the trend
How to judge the trend is very important. If the trend judgment is wrong, it is meaningless to follow the trend and go against the trend. Because you don't know the current situation at all, so how can you go smoothly?
There are still many methods of trend judgment, such as moving average system, Dow theory, trend theory and so on. But we must use a fixed set of methods, that is, our own set of methods for judging trends, so as to achieve consistency before and after trend judgments. Here I will introduce to you a method that combines these classic trend analysis theories.
First of all, we divide the direction of the trend into rising, falling and sideways, which is not a big problem. The second is to divide the level of the trend. We generally divide the trend into small-level trends, short-term trends, medium-term trends, and long-term trends.
1. Small-level trends
The small-level trend refers to the performance of the price in a short period of time, usually between 1-3 days. Small-level trends often occur in short-term trends and are in the opposite direction, which is what we call small-level rebounds or callbacks, but this has little effect on the overall trend. And once the small-level trend is replaced by a new high or new low, it is often a better entry point, whether it is to open a position or increase the position.
2. Short-term trend
Short-term trend refers to the behavior of prices in the short term, rising, falling or sideways. We generally see whether his price is a new high or a new high in about 3 to 10 days. If yes, then we can say that the current short-term trend of the price is up. The same is true for the short-term downward trend, except that the price is a new low within a specified time. Of course, it would be best if the closing price of the day can maintain this new high or new low.
How to understand the new high or new low from 3 days to 10 days? The 3-day new high means that the third day's high is higher than any of the highest points in the previous two days, and we can call it a 3-day new high. Then 10 days is also understandable, and the new low is the other way around. In addition, we should also notice that short-term uptrends and short-term downtrends alternate cycles. In other words, between two short-term rises, there must be a short-term downtrend.
3. Mid-term trend
The medium-term trend is to extend the time period appropriately, generally refers to about 20 days to 50 days, whether the short-term trend hits a new high or a new low within the specified number of days. Here the short-term trend and the day in the short-term trend mean the same thing, that is, we take the short-term trend as a whole (that is, one day in the short-term trend), and then see whether the current price of the whole has reached a new high to judge whether the current price is in mid-term uptrend. Then, the mid-term downtrend is the same reason.
4. Long-term trend
The same is true for the long-term trend, as long as the time period is extended, but this does not require a detailed understanding, because the general trend can still be seen clearly at a glance. On the contrary, the short-term and medium-term trends are not very clear to everyone.
In addition to this method of judging the trend level, we can also verify the accuracy of the current trend judgment based on the trend line. The short-term trend uses the short-term trend line, which is to connect the low points of the price in turn to see if they form a straight line. The medium-term trend is to connect the low points of the short-term trend to see if it is above this straight line. In essence, the biggest function of the trend line is to judge the strength of the trend development.
The medium-term trend is composed of a short-term uptrend and a short-term downtrend. The long-term trend is composed of a medium-term upward trend and a short-term (or medium-term downward) trend. At the same time, the development of the trend also has the problem of strength and weakness.
The strength of the trend, one is to look at the slope of the trend line, the steep rise is generally a strong rise; the other is to look at the daily line combination, a strong upward trend is generally a continuous positive line. The last is whether there is a general trend to cooperate when it rises, and so on.
If a trend starts out strong, it tends to get stronger later on. This is the trend relationship of trend strength. This is also more important for the choice of opening point.
After the trend is judged, some problems may be solved.
Trade with the trend
Follow whose trend?
First of all, I think we should follow the trend with a relatively high level of trend, and secondly, follow the trend with relatively high strength. In the mid-term uptrend, it is best not to rush to short; in the mid-term downtrend, you should not rush to go long, and in the mid-term sideways trend, you should not do more. So how to follow the short-term trend?
Although there are also many traders who buy during the adjustment phase of the upward trend, this is to follow the trend of the freshman level, but it goes against the short-term trend in the short term. Although there is relatively large room for profit in this operation, you must not buy early during the adjustment, otherwise you may stop the loss or clear the position before the upward trend arrives. Therefore, I think it is best to follow the short-term trend.
Following the short-term trend can put you in a more flexible position, but as long as you follow the trend, there will be a problem, that is, the buying point is too high in the short term, or the price will be adjusted slightly after buying. In order to avoid this problem, we can buy in the early stage of short-term trend formation. So this can provide a profit guarantee for future purchases, how should I say it? If you have made some profits in the first position, then there will not be too much psychological burden if there is a certain loss in the second position, which provides a guarantee for smooth short-term adjustments, and once the price strengthens again, then you have already Into profit, you can deal with price fluctuations with peace of mind.
It is also a normal psychology to hold a profitable position than to hold a loss position. Some traders feel at ease when they hold a losing position, which is an unhealthy psychology. In other words, if you start out with a winning position, you have a better chance of catching a big move. Therefore, this involves the best entry position. Because the ratio of profit and risk is the most ideal at this time.
Add
