长腿毛先生 answered the question Which is better, the grid trading method or the trend trading method?

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长腿毛先生

The grid trading method trades the price range of the subject matter. If the price exceeds a certain price, position control is used to sell the higher the price. If the price is lower than a certain price, use position control to buy more and more as it falls. And it is believed that the price of the subject matter will fluctuate around a certain price. thereby profiting from it.

However, the market price does not always fluctuate in a certain area. Therefore, the disadvantage of grid trading is that when the price keeps going in one direction, which is what we call a trending market, if the market and position control are not appropriate, all orders will be in a state of floating loss, or even lose money. The dire consequences of liquidation.

That is to say, the grid trading method is very prominent in the shock, and achieves a state of stable account growth through a small amount of profit.

The trend trading method trades when the price of the underlying object breaks through a range, and after the breakout, it will go farther and farther along the direction of the breakout. Use position control to lose a small amount of money when you lose money. When making money, the funds in the account increase sharply. It is the practice of not opening for three years, but opening for three years.

However, after the market price breaks through a range, not every time the market will move in the direction of the trend. Often in a volatile market, just after a breakthrough, it turns around, and then hits the low point before the breakthrough, or even lower, resulting in a large number of small position stop losses. After the traders tried several times, they failed. This sense of failure strongly tortured the nerves and mentality of the traders. As a result, errors occurred in the final execution strategy, resulting in a large loss.

So which of these two trading methods is better?

Of course, the grid is used when the market fluctuates, and the trend is used when the market is unilateral.

However, this brings us back to our old question, how do you know whether the market will go unilaterally or trend in the future.

The result is that you don't know.

You can only predict future market trends with a high probability by deepening your understanding of the market. Or use reasonable fund management to match a pattern you are good at to get profits from the market.

Whether it is a grid or a trend. There is no better way to say it.

Studying the market is the real thing to do.

Last updated: 08/10/2023 14:18

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young and ignorant, wearing a thin shirt

The grid trading and the trend trading method deal with different market conditions. The grid trading method mainly deals with the volatile market, while the trend trading method deals with the trend market. Next, I will analyze the details of these two trading methods.

What is Grid Trading? What is trend trading?

① Grid trading is a bit like going down the stairs. First, the market needs to reach a relatively low level, or form a consolidation range. The market may bottom out or rebound, but it is impossible to find an accurate reversal point. Buying once down a step, each time can be the same position, or a different position (usually a strategy of gradually enlarging the position is adopted), buy in batches, after the average position price decreases, the market reverses, Exit after the order is profitable.

②Trend trading is to wait for the market to form a oscillating breakout. After the direction is clear, the order will enter the market again, and the position will always be held during the trend of the market to obtain a large profit margin.

The characteristics of the two methods

① Grid trading: the success rate is relatively high, but the profit-loss ratio is not high.

Because it is bought in batches, if you make a mistake in the first purchase, there will be a second and third opportunity to cover your position. After multiple replenishments, you will get a better average price. When the market pulls back, the position is quickly closed, and a high profit-loss ratio is not pursued, and the holding period is short. Grid trading belongs to the pure left trading logic, so it is suitable for use in volatile market.

②Trend trading: the success rate is relatively low, but the profit-loss ratio is high.

Because what we do is to break through the big market after sorting out and pursue a large profit margin, so there will be a good profit-loss ratio, but in the market trend, there are fewer trending markets, the success rate is low, and the holding period is longer. Trend trading is the logic of trading on the right side, so it is more suitable for use in unilateral trend market.

What markets are the two methods suitable for?

① Grid trading is more suitable for the stock market.

The Chinese stock market has been in a pattern of wide fluctuations at the bottom for a long time, which is suitable for trading on the right side of the grid. During the market decline, buy in batches, and when the market pulls back, you can make a profit to close the position, and continue to buy when the market fluctuates again.

② Trend trading is suitable for futures and foreign exchange markets.

Futures commodities and foreign exchange contracts will go out of the trend after shocks, especially affected by fundamentals. For example, since 2022, the Fed’s interest rate hike, the depreciation of the renminbi, and the conflict in Ukraine have all driven the trend of commodities and foreign exchange. Overall, the trend Class Quotes and more.

Which trading group are the two methods suitable for?

①The success rate of grid trading is relatively high, and the cycle of holding positions is relatively short. Although the profit is small every time, the error rate is low. The profit of the account is accumulated, and the transaction is more stable. The difficulty of execution is relatively small, and it is more suitable for novices in trading, or people with low risk appetite.

②The characteristics of trend trading are exactly the opposite. The success rate is low, there are many consecutive mistakes, and the account will have a long period of loss. It depends on the big profit of one market run to make a profit, and the profit fluctuates greatly. Trading experience is required in order to implement trending trading strategies in place.

Precautions for the actual combat of the two strategies

①The most important thing in grid trading is stop loss.

Grid trading is to buy in batches during a decline, which is a relatively contrarian transaction. With continuous buying, the average price of positions will decrease, and a slight pullback in the market will turn losses into profits, which can easily lead to traders having If you are lucky, you can't do a strict stop loss. If you encounter a unilateral market that does not pull back, the order may be deeply trapped, resulting in serious losses.

②The most important thing in trend trading is execution and position management.

When trend trading encounters a volatile market, there will be continuous stop losses, which will seriously damage the confidence of traders, and cause fear and execution problems.

In addition, when the stop loss is continuous in the volatile market, if the position is too heavy, the account will be withdrawn severely, and there may even be a risk of liquidation, which will also lead to the failure of the transaction.

What I want to talk about is almost these points. You can choose a trading method that suits you according to your own personality characteristics.

Last updated: 08/31/2023 01:31