A normal investor must have made sufficient preparations before entering the market, and has a certain economic level to ensure that he will not sit back and eat because of a momentary mistake during the transaction process. Experience leads to being trapped in the quagmire of theory. Once trapped in it, it takes more time to get out, because they will use theoretical methods to predict the next trend of the market when trading.
Today, I compiled a few expected situations that I often encounter. I believe that everyone has experienced several kinds of situations when trading. I hope that you can avoid being baptized by the market and complete this stage of growth.
01 Theoretical Expectations
Dow Theory, Elliott Wave Theory, Wyckoff Theory, Gann Theory, etc. are all quite well-known basic knowledge. People who come into contact with trading will learn at least two or more theories as a benchmark, but it is difficult for people who lack practical experience To experience the correct situation and the wrong type introduced in the theory.
For example, the Elliott Wave Theory mentions that the normal market will enter a larger correction in the third and fifth waves, and that the third wave will be the biggest wave in the entire trend, but it is not true for every trend They will enter a big correction when they reach the fifth wave, and often gradually widen the correction range in the fourth wave, or even directly form a reverse trend. Those who study Elliott Wave Theory will begin to doubt whether there is a problem with the theory itself.
Theory is only one of the tools, and there will not be a period when a single theory dominates. Investors need to learn several different types of theories in order to have the ability to think in multiple ways when facing the market.
02 Type Expectation
M head/W bottom, head-shoulders top/head-shoulders bottom, butterfly, bat, and cup-handle are the basic shapes, which are most often applied in the market, and because of their foundation, quite a variety of variants have been derived For example, butterfly, bat, and crab patterns are harmonic patterns extended from M head/W bottom with Fibonacci. Most of these patterns have strict establishment conditions, which makes many investors Focusing on a particular pattern while ignoring other possibilities during analysis .
03 Price expectations
"When the market enters an equidistant channel, the price will move back and forth between the two sides of the channel", which gives investors the misunderstanding that the price will definitely hit one side of the channel first, and then the next time it will hit the other side of the channel However, the actual situation may be that after touching one side many times in the channel, it turns to the other side or directly makes a breakthrough.
Another way to get attached to the price is Fibonacci . In the traditional Fibonacci usage, there is a saying: when the price pulls back to the 61.8 position, it will reach the 161.8 price in the future. As a result, many investors completely ignore the new information brought by the market after setting their goals, and these people also ignore other common Fibonacci rebound levels, resulting in the overall transaction often ending in failure.
04 Data Expectation
Before the data is released, various media will have predicted values. After the actual value is announced, the relationship with the predicted value will affect the trend of related commodities. Common ones include interest rate resolutions, non-agricultural, GDP, etc., but often in There was no significant fluctuation after the value was announced.
A small number of investors will use the data brought by the market to operate short-term, think of countermeasures before the data is released, and wait and see the market in advance. Such a trading method requires a high degree of concentration. This trading method is not recommended for novices, because it is easy for this group of people to make serious wrong decisions at the slightest sign of trouble.
05 Psychological expectations
This link is the problem that most people will have, which is the so-called misunderstanding of disk sense . For example, when the price has been consolidating for a period of time, most people think that once the market breaks through, it will bring a period of market price, but they did not expect that the market will still move forward smoothly. Or after the price hits the resistance level, most people think that they should enter a rebound and callback, and most people will enter the market to short and try to catch the highest point, but 9 times out of 10, they will sweep the stop loss.
Analyzing the market is not to predict the future. You should not enter the market decisively because of your momentary intuition. You should integrate the existing information to deliberate on the next possibility.
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