Many Hui friends who use the same trading method (price action trading) as me ask me why the trading results are so different with the same trading system? It is also intraday trading, why is my win rate and profit-loss ratio higher than theirs?
In fact, when someone asked me this question at first, I was quite confused.
Because of the same set of trading methods, in theory, we should be the same whether it is the basis for judging the trading direction, finding the target position, stop loss position, etc., but the result is similar to what Huiyou asked. So why is this? ?
After thinking, and chatting with these Huiyou, I found out that it was caused by a few small problems.
The horizontal structure positions we use are different (many Huiyou can’t tell the strength of the horizontal structure positions), so the winning rate is different;
Our entry methods are different, resulting in different stop losses, which will affect the winning rate and profit-loss ratio;
The setting of the target position is different, so the profit and loss ratio will also be different.
When I trade, I basically only use stronger horizontal structure positions and filter out weaker ones. In fact, this is the difference between my first and third points and some Huiyou.
Today I will focus on how to judge the strength of the horizontal structure position, so as to improve the winning rate and profit-loss ratio.
As for how I entered the market, I believe that if you can read more of my articles, then you can find out the answer to how I entered the market.
Without further ado, let's get straight to the point.
How to judge the strength of the horizontal structure position, basically we can follow four principles:
The horizontal structure position close to the current price is strong, and the far one is weak;
The one with more touches is strong, and the one with less is weak;
The neckline position of double bottom, double top, triple bottom, triple top and 2B form is a strong horizontal structure position;
The highs and lows of several months or years are strong horizontal structures. So let's explain one by one now:
1. The horizontal structure that is close to the current price is strong, and the one that is far away is weak. Please see the figure below:
The green area in the above figure, when it was just formed, is a strong horizontal structure position because it is relatively close to the current price, but when the price reaches a certain time at any time (the time here is not standard), here The support becomes less and less effective, that is, the original strong horizontal structure becomes weaker. Please see the picture below:
It is not difficult to see here that with the passage of time, in the end, this relatively strong horizontal structure position was directly broken almost without stopping, which shows how poor its support effect is (generally, No matter how violent the short trend is, there will be a certain reaction at a strong horizontal structure position, and it is rare to be directly broken through)
2. The one with more touches is strong, and the one with less is weak, please see the picture below:
The horizontal structure in the green area in the figure was touched 3 times before being broken, while the red area was only touched once before being broken. Therefore, under the comparison of the two phases, the pressure in the green area is stronger than that in the red area
3. The neckline position of double bottom, double top, triple bottom, triple top, and 2B forms is a strong horizontal structure position. This third point belongs to the use of price patterns to judge, so Hui friends who are familiar with me should know that, I use these price forms every day, so I won’t explain them to you here, because these are very basic price forms, and I won’t waste your precious reading time here. If you still don't understand, you can leave a message.
4. The high and low points of several months or years are strong horizontal structure positions, please see the figure below:
The red circle on the far left in the figure is the lowest point produced by gbpjpy in 2016, which has been close to 6 years. Let's look at the two circles on the right, which are the low points produced in 2019 and 2020. But it is not difficult to see that even in these two time periods, gbpjpy still did not really fall below the low point of 2016 when the downward trend was still very violent, and finally closed above this low point. Therefore, such a horizontal structure position is generally more difficult to break. But if it is broken, there will be a big wave of market in the future.
What I will tell you today is how to judge the strength of the horizontal structure position under the same cycle. If it is a different cycle, I suggest that you respect the structure of the big cycle better. Thank you for your patience in reading, welcome to like, forward, and comment!
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