The risk speculation market in the modern sense has a history of hundreds of years, and the research on market transaction models has been relatively mature. From the current point of view, the most stable and profitable trading mode is trend trading, which is also recognized by the majority of traders. A perfect homeopathic trading system has two key points:
1. Capture the trending band
The market that can really bring profit opportunities to ordinary traders must be a trend market, but a round of trend market will last for a long time, and there will be differences in adjustments and rhythms. Traders should not participate in adjustments, only Trade with the trend swing market.
The definition of a trend is very simple. A trend will be formed when the high or low points decrease or increase in a certain direction. When this rule is broken, the trend may end. The famous turtle rule is to use the simplest method to find and follow the trend, so as to obtain amazing returns. Today, this rule is still valid in most markets.
Medium and long-term trends are difficult to manipulate and have considerable objectivity. Therefore, the focus of the trend trading system is to capture the wave band in the trend market. The tool to capture the trend must be a technical analysis tool with price analysis as the core - K-line shape, support and pressure level, moving average and other indicators that can be used to track the trend, such as MACD, etc., can all capture the trend.
2. Eliminate volatile market
Traders who have been in the investment field for a period of time know that the oscillating market has small fluctuations and a small probability of liquidation, but the regularity is weak and it is difficult to make money. WeChat longeon especially encounters a market similar to "boiled frogs in warm water". Weak traders get knocked out, and even seasoned market veterans are prone to stumble.
Therefore, another starting point when designing a trading system is to find ways to avoid oscillating market conditions, especially some oscillating markets with small amplitude, weak regularity and long time span must be eliminated from the selection of trading opportunities. Here is a little idea:
1. The volatile market usually has a certain range of fluctuations. How to define this range? Can you find this interval and control this interval?
2. Some trend indicators will fail in volatile markets, so can they be used in reverse? As long as the trend indicator fails, is the market oscillating? Investors can think for themselves and look for the inner connection.
Objectively speaking, how to avoid market volatility has always been the most difficult problem in the establishment of a trading system. Trends are easy to capture, and many tools can capture them. Technical analysis also focuses on discovering trends and entry points. However, no one can foresee that the market has entered into oscillation. Therefore, when the oscillation market is confirmed, it has often been oscillating for a period of time, so the trading system has no way to avoid all the oscillation market - when the water is clear, there will be no fish.
While filtering the volatile market, the trading system will also face such a problem: if the requirements are too harsh, although a large number of volatile market can be avoided, a large number of trading opportunities will be lost at the same time; too little filtering, the chance of winning is not high, resulting in The system is difficult to implement and the test is intensified.
Therefore, it is very important to find a balance between how to avoid oscillation as much as possible and not miss important opportunities. Confucianism emphasizes the golden mean. The establishment of a trading system is not to find the most profitable system, not to find the system with the highest winning rate, but to find the most ideal and stable system that can combine the two, and the system that is most suitable for you. This requires Traders experience it carefully.
Notes on building a trading system:
1. Pay attention to the stable operation of the account of the trading system, try to choose stable and reliable trading software, and avoid deep retracement. Generally speaking, an account drawdown of more than 20% is an unacceptable system, even if it occurs only once;
2. It seems that the final profit is good, but the system with a winning rate of less than 40% cannot be used. If there are too many mistakes, it will be difficult to stick to it;
3. A system with too high winning rate is not necessarily a good system, because the filter conditions are too harsh, and a large number of opportunities with operational value will be missed, and the gains outweigh the losses.
Some suggestions for establishing a trading system:
1. You must accept losses from the bottom of your heart. No system has a 100% winning rate. A winning rate of more than 50% combined with the principle of big profits and small losses will create amazing results;
2. Execution, fear and greed should be used in appropriate places. Follow the system signals when making profits, let the profits run, follow the system signals when losing money, and leave the market firmly;
3. The system is a tool, just like no matter how advanced the computer is, it cannot replace the human brain. In extreme market conditions, you still need to add a checkpoint - risk control, and don't let your account suffer catastrophic losses.
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