In real trading, do you often encounter such trading confusion:
You hold an order and have earned 10%, do you want to leave? Let's go, there are still 70% left, I missed the big market behind, regret, anger, and self-blame; don't go, most of the time, the market may turn back, take another roller coaster ride, and finally get a lot of profits. If you spit it back, you may even pay back the money, regret it, and always think "If you are not greedy, just stop the profit earlier."
The reason why everyone has these trading confusions is because you don't know whether this wave of market is basically over, or you have to move on, and you don't know how much market is still ahead, which leads to your hesitation and confusion. If you know that there are still about 70% of the market in the future, of course you will not leave and hold firmly.
1. Technical analysis cannot judge the size of the market, and can only abide by the rules, leave the market when the stop loss is hit, hold without hitting the stop loss, and let the profits run freely.
Of course, if you don’t understand fundamentals or are not interested in fundamentals, then use technical analysis alone. In the category of technical analysis, we don’t know how much range there may be behind the market. The front is a black hole for us .
You can't "on the one hand, want profits to run freely, and on the other hand, don't want profits to retrace". This is contradictory, unless the market is unilaterally rising and rising all the way, just like the A-share bull market in the first half of 2015, but this kind of unilateral rising market is too rare.
However, most of the trends are oscillating trends, one step forward, three times back, or oscillating the market. If you want profits to run freely, you must allow the market to adjust repeatedly and provide a room for adjustment. When it is time to trade, it will inevitably face a profit retracement, and even a larger retracement, and the retracement will be all.
If you don’t want the profit to retrace, it means that if there is any trouble, you will quickly stop the profit and lock in the profit; but you will also face the situation that after the stop profit, the market will continue to soar, and you will miss the market.
So we choose to let profits run free? Or allow profits to retrace? None of this depends on us, it depends on our trading system.
When the market retraces and does not reach our stop loss or moving stop position, we will hold the order and let the profit run freely. It doesn't matter where the market goes, this is the thinking of the trend.
If our trailing stop is triggered when the market retraces, we will leave the market. At this time, the profit retracement is relatively large, but it prevents the market from changing its trend and avoiding floating profit from turning into floating loss.
It's just that the profit taking is relatively large, in exchange for possible profits running freely, you can't have both. We need to know that losses are something we can control, but profits are rewarded by God, and we can only let profits run freely.
There is never a perfect solution to a transaction, it's all about trade-offs.
Take profit for example, a certain perfect operation is meaningless in the whole trading career. No matter how you choose, you will inevitably face premature stop profit; Too much profit taking.
When faced with these problems, we all have to think that these are normal. Through the review, you will find that there are not many trading opportunities that belong to you, so if you miss out, you don’t have to be too harsh on yourself. It is a market that is outside your own operating rules and does not belong to you.
What we can do is to make profits within the trading system. As for the profits outside the trading system, we will lose as soon as possible.
2. Fundamentals and information are different concepts. Information can be digested by the market in a timely manner; but fundamentals cannot be fully reflected on the market, and fundamentals are valuable.
The technical school believes that all fundamentals will be reflected on the technical side, and the price on the disk has already digested all the information. This sentence is the theoretical basis for the technologists to completely abandon the fundamentals.
In fact, this sentence is just the first hypothesis of Dow Theory, remember, it is just a hypothesis. However, the later technocrats did not think deeply about it, so they simply took it as the truth and memorized it.
No matter in theory or in reality, in many cases, the price on the disk cannot reflect all information, because in reality, we often see a major supply and demand information, and the time of impact is not instantaneous, but long-term:
For example, after the purchase and storage price of cotton was canceled and changed to direct subsidy, the information was not digested instantly, but continued and fermented, resulting in a gradual decline in prices from 2014 to 2015, affecting 1-2 years, or even long-term; The supply-side reforms implemented by the country did not digest the information in an instant, but continued to ferment, bringing about a black bull market that lasted for two years from 2016 to 2017.
The reason why the technical school believes that "information is reflected on the disk" is because the technical school confuses fundamentals and news, mistakenly thinking that news is fundamentals, fundamentals are news, and information includes fundamentals and news.
In fact, this is the reason why the technical school does not understand the fundamental school at all. The fundamental school does not attach importance to news, and despises the news, but pays attention to the fundamentals. In the eyes of the fundamental school, the fundamentals are to go deep into the supply and demand of commodities Logically, it is necessary to go deep into the product prospects and demands of listed companies, which will affect the long-term.
The fundamentals mentioned by the technical school are the so-called news and superficial information.
For example, "I heard that this stock is going to be acquired", "I heard that this product is being manipulated by someone", this is news, and the characteristics of news are fragmented, weak in logic, true or false, unprovable, and short-term , It affects the short term, not the medium and long term, so the news can be reflected on the market and digested in an instant, but the fundamentals are not-the impact of the fundamentals is in the medium and long term.
Let's talk about it in detail, the technical aspect refers to the price trend on the disk, and the trend on the disk is complex and diverse, with many changes. The same fundamental aspect is clear from the initial point to the end point.
However, the process from the initial point to the end point is arbitrary and random. It can be pulled up directly, or "two steps forward", or it can rise slowly, or oscillate for a while before rising; it can also oscillate disorderly for most of the time, and then Pull up quickly and so on.
And if you only use "technical aspects" to represent all kinds of trends in general, you are deceiving yourself.
Because in these various trends, for example, there are various breakthroughs, but only a small number of breakthroughs can meet your entry conditions, but we cannot do every breakthrough. This means that the same fundamentals are fixed from the initial point to the end point. However, due to the variety of advance paths, it is possible to send your entry signal technically, so the fundamentals cannot be fully reflected on the disk.
To put it simply, different stocks had similar breakthroughs at the time. This stock rose by 5%, that stock rose by 30%, another stock rose by 100%, and another stock rose by 500%. So, how do you simply say "all information will be reflected on the disk"?
3. The fundamentals can judge the size of the market, and can solve the problem of "holding an order and earning 10%, should you go?", but the fundamentals are too difficult to grasp.
Of course, if you still want to solve this problem, you need to rely on fundamentals at this time. In order to solve this problem, technical analysis is difficult to do, and fundamentals are needed to make up for it.
Because the fundamentals determine the future, there must be a contradiction between supply and demand in the fundamentals behind the big commodity market. Behind the big stock market is the tight supply and demand of the company's products, otherwise there will be no big market; and technical analysis only confirms the past, which is a lag Because of the price, it is difficult to judge the future. This is the essence and difference of the two methods.
Theoretically speaking, the fundamentals can judge the size of the subsequent market. If there is about 100% room for the market based on the fundamentals, then if you have earned 10% of the point profit, you will definitely not go, but continue to hold; When the market has risen by about 80%, and the remaining 20% of the profit, you can go or not at this time, and you can gradually reduce the position and stop the profit, so as to prevent us from taking the profit too early and missing the profit later Quotes.
If it is judged by the fundamentals that there is only about 10% room for the market, which is relatively small, then when a 10% point profit is made, you can withdraw, so as to prevent taking profit too late. Therefore, only through the in-depth analysis and judgment of the fundamentals can the question raised at the beginning of "holding an order and earning 10% already, can you go or not?"
But the fundamentals are very complicated. How many people can really study the fundamentals? Relatively few, and the information outside is an explosive mass of information. At this time, is it bullish or bearish? Long and short are vague most of the time.
What's more, it is even more difficult to use fundamentals to judge the size of the subsequent market. This requires long-term fundamentals tracking and accumulation, as well as extensive contacts, data and information resources.
So in theory, the fundamentals can judge the size of the future market, but for the vast majority of people, this is unrealistic. Therefore, many people think that fundamentals are intricate information that interferes with your operations, which is not as simple and crude as pure technical analysis.
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