The trading market is divided into unilateral trend and oscillating (consolidation) trend. Compared with oscillating market, unilateral market has greater certainty and less risk, so most people who trade with the trend are waiting for the opportunity of unilateral trend .
However, the more emphasis is placed on following the trend, the easier it is to arouse Huiyou's curiosity about the volatile market. Although following the trend is relatively less risky, basically all trading varieties in the market are usually in a volatile trend for more than 70% of the trading time.
So in the oscillating trend, should we still make orders? If you want to make an order, how should you do it?
The oscillating trend means that the market is easy to change its face in a short period of time. At this time, it is easy to "lose your wife and lose your army" when making orders. Therefore, for most novices, the oscillating market is a market that sends money to the market. It is recommended that novices choose to give up.
However, for some trading masters, the volatile market is not only a market for giving money, but a market for huge profits. Go long when it falls to a low level, and short when it rises to a previous high. Indeed, once you find the essence of shock trading, it will undoubtedly start a crazy money-making mode.
Next, Lao Zou will share with you how those trading masters who are crazy about making money look for trading opportunities to make profits in the volatile market!
01 Judging whether the shock is unilateral
If you want to find trading opportunities in the shock, you must first be able to judge whether the market is in a shock trend or a unilateral trend. To distinguish between unilateral trends and oscillating trends, the following four methods can be used.
1. Judging by trend indicators - moving averages, trend lines and channels are all good tools for judging trends.
Moving average: If the market price is distributed on one side of the moving average, it means that the market is in a unilateral trend; if the market price fluctuates back and forth on the moving average, it means that the market is in a consolidation trend.
Trend line: The trend line presents an obvious rising or falling state, indicating that the market is in a unilateral trend. A trend line is almost horizontal, indicating that the market is in a choppy trend.
Channel: The market price fluctuates back and forth in the trend channel, and rebounds continuously on the upper and lower tracks of the channel, indicating that the market is in a consolidation trend. If the market price breaks through the channel, it indicates that the market will enter a unilateral trend.
Breakthroughs of the above moving averages, trend lines and channels are signs of market trend changes.
2. Bollinger Bands/Alligator Indicator
Both Bollinger Bands and Alligator indicators have upper and lower orbits:
When the track tends to close, it means that the market may be in a volatile trend;
When the track opens to both sides, it means that the market may be in a unilateral trend.
3. Technical form
In addition to technical indicators, traders can also use the commonly used K-line combination form or naked K form to judge whether the current trading market is unilateral or volatile.
Consolidation patterns: triangles, flags, rectangles, wedges, and rhombuses are consolidation patterns. The formation of these patterns means the beginning of the consolidation pattern, and the breakthrough of these patterns means the end of the consolidation pattern.
Reversal patterns: head-and-shoulders, double top/bottom, triple top/bottom, V-shaped top/bottom, and circular arc are all reversal patterns. The formation of the pattern means that the market will enter a unilateral trend next.
The above technical forms require multiple K-line combinations to form. Of course, it can also be identified by naked K with reversal or continuation signs, which can identify signals faster.
Sustained form: For example, window form, breakup form, white three soldiers, three ups and three downs are all continuation forms, which means that whatever the original trend is, what trend the market will continue.
Reversal patterns: Shooting star line, hammer line, piercing pattern, dark cloud cover, engulfing pattern, dusk/morning star are reversal patterns, indicating that the market will enter a unilateral trend next.
4. Oscillator ADXIn addition, add a knowledge of identifying oscillating trends, the oscillating indicator ADX can also help you identify oscillating trends.
02 How to trade volatile market?
After identifying the oscillating trend, how to find trading signals to place orders in the oscillating trend? Let's discuss it together.
Oscillation is the normal state of market price operation, even in an upward or downward trend, there are price oscillations. The methods of placing orders in oscillating trends are also divided into ordering with the trend and placing orders against the trend. For details, please refer to the following content.
1. Directly use the midline of high and low points to make orders
For the volatile market, the general thinking of making orders is: find the central level of the box shock.
The so-called box shock refers to the rectangular box formed by the high and low points of the shock market. The central level of the box shock refers to the midline of the high and low points of the shock market.
After finding the central level of the box shock, how to trade?
If the market price falls below the central level of the recent price, choose to go long at the second low point, and set the stop loss below the lowest point;
If the market price rises higher than the recent price pivot level, choose to short at the second high point, and set the stop loss above the highest point.
The central line here uses the midline of the highest point and the lowest point, and the second highest point and the second lowest point also have a central line, which can be used as a reference for more radical orders.
It is worth noting that: at the end of the shock and the beginning of the unilateral trend, if the shock trend lasts for a long time, it may bring about a sharp rise or fall.
Sometimes it is difficult for us to detect the boundary line between the shock and the unilateral trend, so the highest point and the lowest point of the box shock should be used as the reference point for stop loss, and the stop loss should not be less.
2. Use the Bollinger Bands indicator to make orders
I don’t know if you can perceive that the above order-making method is very similar to the Bollinger Bands indicator, so you can also use the Bollinger Bands indicator in the oscillating trend, and this indicator itself can detect the effectiveness of the oscillating trend.
As shown in the figure above, use the opening and closing of the Bollinger Bands channel to directly judge the shock trend, and use the middle line of the Bollinger Bands to make orders. In an oscillating trend:
When the market price falls and breaks through the middle line of the Bollinger Bands, go long at the second low point, set the stop loss below the lowest point, and set the target take profit level below the second high point;
When the market price rises and breaks through the midline, go short at the second high point, set the stop loss above the highest point, and set the target profit level above the second low point.
The above methods of ordering are essentially ordering against the trend in a volatile trend, selling high and buying low. So it involves the process of predicting highs and lows.
It is generally believed that the range of highs and lows in the middle and late stages of a volatile market will not be higher than the previous highs and lows.
Therefore, in a downtrend, if the price rises after the low point, you can go long; in an uptrend, if the price starts to fall at the highest point, you can go short.
Of course, the safer way is to trade with the trend, with the midline as an important support and resistance level. As shown in the figure below, with the help of the Bollinger Bands indicator, you can also do homeopathic trading in oscillating trends.
When the price falls through the middle line, enter the market to sell, set the stop loss above the middle line, and set the take profit below the lowest point;
When the price rises and breaks through the midline, enter the market to go long, set the stop loss below the midline, and set the take profit above the highest point.
Trading in a volatile market is actually equivalent to a reduced version of a unilateral trend, looking for trading opportunities in a small trend.
The time to make orders is still to look at the overall trend in a large cycle, and to make orders in a small cycle. Even when you are particularly familiar with a trading product, we can have a general understanding of when the volatility is relatively large and when the time period is the oscillating trend.
It is worth noting that when doing volatile market, we must pay special attention to fundamental news, and avoid major events, data releases or speeches by important figures.
Finally, I would like to remind you that although I have introduced the method of trading in volatile markets, Lao Zou still recommends that you take advantage of the trend, take light positions, and strictly stop losses , because compared to blindly pursuing huge profits, I hope that everyone can continue to be stable in this market for a long time profit .
Add
