1. Several trends in the foreign exchange market
Trends can be divided into initial trends, continuous trends, and final trends. Investors should operate differently for these three types of trends. For the nascent trend, it is intended to grasp and analyze whether the trend can continue. For continuous trends, pay attention to the patience of your own positions. For the ending trend, on the basis of the first two steps, you must have a relatively thorough understanding of the market's fundamentals, technical aspects, and capital aspects, and pay attention to closing positions and exiting the market when the market panics.
2. Grasp the angry trend
Investors must know the trend operation well. How the trend advances, whether to consolidate or reverse rapidly after the end of the trend, these are things that investors need to figure out. Some people may say, I will operate when I know the trend, but the key is not clear. The author believes that we must have a childlike innocence when doing foreign exchange transactions, that is, a quiet heart, so that we will not lose sight of the market due to too much self-guessing. This is also the truth that most successful foreign exchange people often say that transactions should be simple. The market is what it is. Most of the time, you can make money by entering the market to go short/long, which is much safer and more secure than buying the bottom.
3. Taking advantage of the trend can sometimes hurt people, so we must grasp the timing
Pay attention to the control of the timing of opening a position, don't rush, wait. Trend trading is naturally medium and long-term. The few well-done investors I know have peaceful and stable personalities, and their lives are very orderly, and they don't act impulsively.
4. Perceive the pace of the market
There are both similarities and differences in the operation rules of more than a dozen foreign exchange varieties in the foreign exchange market. Investors need to understand the "character" of different varieties running in a trend within a period of time, whether it is as fast as a gust of wind, or is it gentle and drizzle. If the PTA is trending and oscillating down, and it repeats within the day, it is necessary to control the position and keep an eye on the market. For varieties with strong linkage, it is also necessary to observe the operating conditions of foreign countries, such as Shanghai Copper. Comparing domestic and foreign markets, it must be a short-term downward trend. Another example is Zheng Mian, who is a slow "big bear".
5. Calculate the stability of a variety trend within a certain period of time
In the process of foreign exchange market operation, the trend can be divided into beginning, continuation and end stages. However, in the turning process of each stage of the trend, we must carefully understand and master its laws.
In the process of trading, you should follow the general trend, that is, understand which kind of trend you are currently participating in, and try not to participate in the trend oscillation during the trend conversion process, which is also related to the external market and the external market has not gone well.
Let's talk a little bit farther away. In the era of Livermore, the transmission of information was very unsmooth. Most people can only know the closing price of stocks by reading newspapers. Livermore was working as a stock price recorder and had access to changes in stock prices throughout the trading day. He has a good memory when he is young, and is very sensitive to numbers. Over time, he has some "predictability" for certain changes in prices. So under the guidance of his friends, he used very small funds to speculate in bucket shops, which made him a lot of money.
At that time, the strategy used by Livermore may not be very subtle, but he has the advantage of receiving information. He can understand price fluctuations better than anyone else, which is the moat of his strategy.
There is another strategy that belongs to the arbitrage or quantitative model strategy. This type of strategy takes advantage of time differences, poor cognition, or short-term price overreactions caused by unexpected events to profit. Its advantage is that some algorithms can find small profit opportunities faster than other market participants. The profit point is relatively stable, but the profit margin is limited.
The fewer people who know about this strategy, the more potentially rewarding it is. It takes a lot of work to develop a strategy that performs well. But once the strategy is made public, the profit point will be eroded by various funds. This type of strategy may not necessarily fail after it is made public, but the rate of return will be greatly narrowed, so narrow that it is tasteless.
And this type of strategy will also be constrained by market capacity. Even if the strategy is not disclosed, if the transaction scale is large, the effectiveness of the strategy will also be affected.
Those strategies that will not fail must be established based on the inherent logic of the market. This type of strategy will not fail even if it is made public, because the biggest difficulty in implementing this type of strategy is that traders need to have sufficient awareness of the strategy and sufficient ability to identify the advantages of the strategy.
For example, trend trading strategies, every trader has tried it. But there are very few traders who can really take advantage of the trend to make profits. Most people don't focus on how to "identify" trends, but hope to grasp each trend in a mechanical and unthinking way. If you can really catch the whole trend, you can still make money, but the overall return will be lowered by large losses.
The reason why most people lose money instead of profit is because they overestimate their ability to bear. He hopes to catch the big trend by taking a big retracement. But the sharp retracement caused him to lose confidence in trend trading. Although this strategy is public, not everyone has a "moat". If you don't have enough awareness and recognition of the trend, it will be difficult for you to withstand the torture of the market.
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