Many novices tend to be limited to a simple buying and selling signal, often ignoring the overall structural trend buying and selling points, which is a manifestation of unclear buying and selling points. As shown in Figure 1:
figure 1)
Entering the market only by looking at the signal is like a blind man feeling the elephant. It is a blind trading behavior, and the failure rate will be higher.
If we understand the structural trend of the entry signal, then we can understand whether the signal entry is to rebound the market, reverse the market, or trade with the trend.
A clear buying and selling point is also reflected in the assessment of risk level and profit-loss ratio. Take the 30-minute reversal market of gold this week as an example to explain, see picture (2):
figure 2)
The price at point C did not hit a new low at the previous low point A, which may form a double-bottom reversal. Suppose you expect the market to reverse and rise in the market outlook, and plan to go long.
The double-bottom structure is reversed, and the entry points are the right bottom, the neckline breakthrough point, and the retracement point after the breakthrough.
The right bottom entry point is point 1 in Figure (2). The establishment of a double-bottom reversal needs to break through the neckline, so the entry here is a bottom-hunting behavior, which is relatively aggressive, but because the stop loss is at the horizontal support level of point A Below, the target stop profit point is the resistance level 3, so its profit-loss ratio is the highest.
The neckline point breaks through and enters the market, that is, point 2 in Figure (2). Breaking through the resistance level 1 establishes a double-bottom reversal. It will be relatively stable to do long. The stop loss is below the horizontal support level of point C or point A, but relatively For the entry at the bottom right, the stop loss space is larger, and the profit-loss ratio is lower.
The entry point after the breakthrough is point 3 and point 4 in Figure (2). The entry point here is already in the trend of rising structure, and the winning rate will be higher, but the profit and loss ratio Space will also be reduced.
Resistance level 2 is at point 5 when you break through and enter the market, and the stop loss is below point 3. However, if the take profit target is at resistance level 3, then the profit margin is not large, and the risk of chasing higher is also increased.
Finally, we summarize the next clear criteria for judging buying and selling points:
1. The structural trend of the trading signal
2. Is the entry point aggressive or stable?
3. Profit and loss ratio space size
Whether it is a double-bottom structure, a rectangle, a triangle, or a head-and-shoulders form of trading, traders must know what their entry points are, whether these entry points are aggressive or steady, and the size of the profit-loss ratio. Only when there are numbers, the transaction can be done with ease.
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