Trading is the process of moving from one mistake to another. In Zeng Guofan's words, it is "repeated failures and repeated battles", and the process of learning trading is a process of constant "deny, affirmation, and negation". Whenever you rush back to the market because you think you have something to gain, the market will always hit you again with novel or old-fashioned scripts. The stop loss was broken by an old problem yesterday. I was short and short, and the market also went short, but the stop loss was still swept away, and then I watched the short sellers go all the way. There was one time at the beginning of this year, I was long on the euro, and I was long on the euro, but the euro first had a correction that lasted for three days, which exploded my position, and then went out of a long market of more than 1,000 points, which has continued until now. I almost vomited blood. I believe that friends who are struggling in the quagmire of trading have more than once lost or even liquidated an order that was already profitable or should have been profitable later. Why is this? How should it be avoided?
First: Technical analysis should be a two-pronged approach. In addition to judging the direction, it is also necessary to accurately enter and exit points.
Trend traders always think that everything will be fine if they can judge the general direction of the market, so they focus on the trend pattern, and don't care much about the precise entry point, and some trend traders even think that the entry point is not important , The big deal is to stop the loss and advance again. After many trials and errors, there will always be a big market once in a while. That's what I thought before. In fact, there are many positions for trend traders to enter the market. The first is the position under trend pressure, which is also the position with the largest space once the reverse trend is established. The second is in the shock area when the previous trend fails. The third is Is where a new trend emerges and begins to break out of growth. The accuracy of these three positions is getting higher and higher, but the target profit space is getting less and less. Traders who believe in following the trend will only participate in the third position, while those who believe that they can judge that a new trend will occur will intervene early and participate in the first two positions. Technical analysis is not enough to just give the direction of the trend, but also to analyze the entry position that best suits your requirements such as capital amount and risk preference. The same is true for the exit position. The expected goal is often difficult to achieve. Technical analysis should try to give the exit position that maximizes the benefits, so as to avoid missing the profit opportunities that are finally caught.
Second: follow the trend, go against the trend, a mess.
Because of greed, we always hope to eat up every section of the trend, but in the end we fall into the trap of finding the top and bottom and cannot extricate ourselves. To do trend trading, it is best to enter the market on a rebound, which is the end stage of a small market that is opposite to the general trend. So we can actually find the top and buy the bottom, but we must find the top of the rebound and buy the bottom of the callback. The ideal way of trend trading is to follow the general trend and partly go against the trend. However, because of timidity and superstition, trend traders like me dare not go to the top and buy the bottom. I always thought that the daily level trend in fantasy would start at a bottom breakthrough on the hourly line, so the hourly line took advantage of the trend to enter the market, and finally went to the opposite side of finding the top and buying the bottom, becoming a chasing up and killing down , the sell order was shamefully hung on the bottom line of the hour-level shock center. Believe me, I've done this stupid thing more than once.
Third: Another use of stop loss is to define the entry range in line with risk control.
There are two algorithms for stop loss, one is absolute stop loss, the so-called 23% principle is to define the stop loss position by the absolute amount of loss, the purpose is to protect your account from fatal losses; the second is technical Stop loss means that the follow-up market destroys your entry basis. For example, I use the moving average to break through and enter the market to sell short. The market closes back above the moving average and forms a new K line above the moving average. This is the time to stop loss and leave the market. . No matter which of these two conditions is triggered first, the trader must stop the loss and leave the market. Therefore, when a trader actually enters the market, if the technical stop loss points of the entry point exceed the absolute stop loss points, then this position is not in line with your risk control position. To put it bluntly, you can’t afford it with less money. The absolute stop loss point defines the range of our small capital entry. For example, if I have a single stop loss of $5 and place a 0.01 lot, then the stop loss space is only 50 points, and I must find it within 50 points below the pressure position. For a short-selling opportunity, if it exceeds 50 points, my technical stop loss will exceed my risk control range, which may cause my small account to suffer excessive losses. But if I insist on using a stop loss of 50 points, there will be a sad phenomenon that the market rebounds at 55 points and sweeps my stop loss but has not broken through the pressure line and then turns downward.
Fourth: Even if the stop profit and stop loss targets are not reached, leave the market first if necessary.
I always imagine that the follow-up trend will start from the moment I enter the market and never look back, but the facts have mocked my fantasy time and time again. The most scarce thing in the market is the V-shaped reversal, and most of the cases are oscillating reversals or breakthroughs. Before and after every attractive unilateral market, there is a period of excruciating shocks. Maybe I stared at the market for half a month, and the unilateral market broke through in the five minutes when I went to pee. After sighing, I am deeply aware that to do trend trading, you need to enter the market in advance to ambush. But if you enter the venue in advance, you must accept the torture of shocks in advance. If the expected trend after we enter the market does not happen but reverses, causing us a floating loss but not a stop loss, then the expected trend must happen when it breaks through again next time, otherwise, we will be far away from the market. field! I have set myself a trading discipline that is not very strict. When the price returns to the entry line for the third time, I have to leave the market anyway. For this reason, I summarized in a previous jingle that "short-term long-term , it will definitely go bad", if the market sweeps my entry position for the second time, and the expected trend is still there, this transaction will definitely go bad, and the third time is God giving me a chance to escape. The proof of my self-created discipline is very worthy of strict enforcement.
Discussion: Can small funds do medium and long-term transactions?
From the perspective of risk control, when we do medium and long-term, we actually need to expand the stop loss space. I believe no one will agree that the technical stop loss position on the one-hour line can be used to position the stop loss space for the market at the daily line level. When we want to capture the trend at the daily level, we must endure at least 1 to 2 days of daily average amplitude stop loss space. The average daily amplitude of the pound is about 100 points, so the daily level trend of the pound has a stop loss space At least set to one hundred to two hundred points. A friend said, didn’t you just talk about the 23% stop loss principle, didn’t you just talk about a stop loss of 50 pips, that’s right, it just shows that my account of several hundred dollars did not play with the British pound. Qualification for daily trend market! The Dow Theory has long made it clear that the shorter the time level, the greater the characteristics of disorderly fluctuations in the market. You can experience it by observing it. Almost any variety, at any time level K-line, is purely bald. The k-line is always the scarcest. Most of the k-lines have long or short shadow lines. In the volatile market, the shadow lines are longer. These shadow lines are traces of disorderly oscillations. There is no reason for no shocks. It can happen all the time, if you don't take the range of disorderly oscillation into the stop loss range, you are doomed to be frequently swept stop loss.
Finally, let me make a digression. In fact, it can be deduced from this that what level of market is suitable for your account, which is also a special concern of many traders. Calculate your absolute stop loss points according to the 23% principle. For example, my small account is 50 points, divided by 2, it is 25 points, and you can find out which variety and time level have an average amplitude of about 25 points. , For example, the amplitude of the one-hour K-line of a certain variety is 20 points, and the amplitude of the 4-hour K-line is 60 points, then I will do the one-hour K-line. What, how to see the average amplitude? If you have this indicator, look for it yourself.
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