"Grandfather" Jesse Livermore said: "I make money because I can sit still more than others." This is a naked analysis of foreign exchange trading. In this game of using a loss you can know to bet on a profit you don’t know, most of the time, you really need to sit...
Today I bring a classic article, maybe some friends have already read it~ But I read it often, I hope you can gain something~
Once the trend is formed, it will not simply be reversed, and any unexpected situation (such as the investigation of Goldman Sachs, the manipulation of large households in Zhejiang, the earthquake caused by the little devil, the sudden dumping of reserves by the country, and the sudden increase of central bank Margins, sudden interest rate hikes, and the downgrade of the old US by S&P, etc.) cannot immediately change the trend. When the market digests the news, it will still return to its original path.
All actions in the market are to play with you, this is technical analysis. And I dare say that the operation method based on this sentence is incomparable to any known analysis method.
For example, any very bullish market will end in the craziest. This is a conclusion with high probability. When you look at the market to the craziest, when you hesitate for a long time and decide to enter, you are destined to be thrown to the top of the mountain or the bottom of the valley.
For another example, the start of any market is always when people believe that it is impossible. There is also a head and shoulders counterattack.
How are traps formed in the market? In fact, these traps in the market are not artificially created, but these traps are the most basic manifestation of human nature. All the bad roots and shining points of people are refracted from here.
Stop loss is not the most important thing, and the mentality does not need to be too good, as long as you have an average opening price that can sit on the mountain and watch the tiger fight. And the average opening price of sitting on the mountain and watching the tiger fight comes from the trap of the market. This is the most awesome type of person in the market, the dancer on the trap.
How to judge what is the formation of a falling or rising trend also requires the help of traps. Let me give an example, assuming that you use the price to fall below the 30-minute 60-day moving average as the basis for the end of the short-term rising market. When the price breaks the 60-day moving average and pull back, if you correct the decline after the top, the decline will be very rapid. If it breaks through the 60-day line and pulls up quickly, there is no need to worry. There is a high probability that the price will step back on the 60-day line again, and then at least a slight loss can be out. It is such a simple method. I used to create a record of 70% in 23 days on Tiantong Bank, which is much more difficult to play than foreign exchange, and the trading rules are deadly.
The market is going crazy every day, and no one is willing to pay a higher or lower price. If the market wants to continue, it must go out of the secondary reentry trend and attract everyone to participate. This secondary retracement trend is very harmful. For those who are familiar with the rules of the game, it is the position to open and increase positions. Also, if you are not familiar with it, this kind of secondary return can definitely kill many people. The retracement trend itself is deceiving. If the retracement trend suddenly shows a violent acceleration trend on a certain day, then it will come to an end.
The most powerful type of people in this market are dancers on the trap. And the dancers on the trap, simply put, go against the small trend and follow the general trend. In any market, no matter how good the trend is, there will be a retracement. This is a 100% thing, and the retracement is extremely fierce. Breaking positions, increasing positions and increasing volume, indicators go bad, and I like this situation very much, the more so, the more opportunities. For me, who has little money, this is the only way I can reduce my cost of building a position, so that my position has a safe price of sitting on the mountain and watching the tiger fight.
The most common way to kill people in the capital market is sideways trading, which is the biggest trap. In the sideways stage, technical analysis will be invalid. Sideways are often also a signal that a bigger market is about to emerge. First of all, before the market chooses the real direction sideways, there will often be a very sudden false breakthrough in the opposite direction; secondly, after the sideways breakthrough, it will often test the sideways range. Well, for example, if you want to open a position in a sideways market, the best opportunity is a reverse false breakthrough. Even if you are wrong, there is still a backtest interval for you to escape. If you have a list in your hand and there is a floating profit, then let it go. After the consolidation, there is often a high probability of continuing the original trend. Even if it reverses after the consolidation, there will be a reverse false breakthrough, which can stop the profit.
Trading with market traps is undoubtedly a simple and practical way, and this simple way has a sufficient theoretical basis. The rules of the game in the futures market determine that any market is inseparable from traps, and any technical indicators will not tell you what will happen in the future. They are just followers of the market, so they have no confidence in the hearts of traders. But the trap can tell you that the market is over, and action must be taken.
For an excellent trader, no matter how powerful the technical indicators are, they are not as powerful as the candlestick charts. Some large-scale technical graphics such as triangles, head-and-shoulders tops, and round tops and round bottoms often produce unexpected effects once they are formed on the daily cycle. Once the large-cycle technical graphics are formed, the trend must be completed, and the main force cannot be changed. The only thing it can do is to create illusions and affect you to follow the graphics.
If the weekly line forms an upward consolidation triangle and breaks upward, no matter how hard the daily line is tossing, it will eventually serve the weekly trend. This greatly improves the operability and enables you to hold a hole card in daily trading. Play across cycles, as long as your judgment is correct in the big cycle, you can completely call the wind and rain in the short cycle, and no one will try to lie to you. And we know that the graph formed by the larger cycle is more reliable, which itself is a high winning rate transaction.
Cross-cycle is a means of generating huge profits. The difficulty of inter-cycle is that you cannot confirm what the current trend is, and the large k-line graph is a very reliable conclusion in a large cycle. It solves this problem that bothers you. Only a large k-line combination can have As a result, three or four bar graphs such as doji, harami, and dark cloud cover are basically deceiving you without discussion. And relying on these as the basis for your trading will basically be killed. This is also the macro thinking of futures trading, and there is a lot of tolerance.
My trading ideas are very BT, and the core ideas are three: 1. About technical analysis - the market can play with people; 2. Reduce transaction costs (handling fees, opening prices, etc.); 3. Stop loss.
My personal trading strategy is very simple. The core is not to break the previous high, not to break the previous low, and to break through shocks. These are all tricks, nothing, very few open positions at market prices, they are all pending orders. Because the market can play with people, it is bound to create a large number of long or short traps. Using these traps will reduce your holding costs. This is critical, the better the price, the safer you are and the less you need to be afraid of.
Stop loss is the final bottom line. Any technical analysis method is to play with probability (it is nothing more than high probability and low probability), so it is safe to have a stop loss.
What you use to cut the cake in the market determines how you identify trends. There is no standard answer to this question. For example, some people think that on the weekly line, the dead cross of the 5-week moving average and the 10-week moving average are a bearish trend, and the golden cross is a bullish trend. Within his framework, the market is divided by him. Another example is to divide the upward trend and the downward trend by the 20-day moving average.
In a more high-end way, that man can know where the center of gravity of market transactions is just by looking at the candlestick chart, so he can use each intensive transaction area as a position for long-short confrontation to follow the trend. But no matter how you do it, don't try to sell the highest and buy the lowest, that is simply a legend.
What is a trend is simpler, but it is something that everyone can see but is ignored. An uptrend means that the callback does not break the previous low, and a downtrend means that the rise does not break the previous high. A nonsense is also the truth. Trend is such a feature, and the most obvious, on any cycle chart.
When using those gimmicks to predict the market, when using those gorgeous technical indicators to predict the future, you might as well take a serious look at Dow Theory and learn the 123 rule, which is extremely effective with incomparable lag.
Lighten the position, or patiently find a more favorable opening price, and place a larger stop loss. Then go fishing every day, and after a period of time you will find that you will make more money, of course, the premise is that your money does not affect your life.
No one knows what didn't happen. A consolidation range, before it breaks through, no one knows where it will go. Even if it breaks through, it will break the rise and fall, and break the fall and rise. Those methods of technical analysis are useless.
What kind of effect will the moving averages of different periods have on the price support (suppression is also, let's take long as an example)? For example, the price of x began to reverse, x broke through the 60-day moving average, and then stepped back to reach the 40-day moving average. Now we can basically be sure that the bulls have taken the lead, and the strength of the bears has been unable to suppress the price of x to the 60-day moving average. Below, we start to do more. The price pulls back again after rising. If the price reaches the 20-day moving average and is unable to go down, then I will increase my position, because the market trend is strengthened again, and the bears can't do anything about the 40-day moving average, and the price starts to rise. The most perfect effect is that the bears can't even do anything about the 10-day moving average. The same is true when it reverses. The most perfect effect of a sharp decline in a reversal is to fall below the 60-day moving average in one fell swoop, and then the price pulls back and is unable to return to the 60-day moving average. It is basically certain that the trend has changed.
The supporting and suppressing effects of different period moving averages on prices will have an impact on future trends. The more powerless the price is to the small-period moving average, the stronger the trend. All the clues of the long-short conversion and the fund allocation of fund management can be grasped with a small moving average.
If your judgment on the market is very accurate, you can set the stop loss higher. The most important thing is to control your own hands, and never quit until you reach the stop loss point. After making a profit, you can raise the stop loss point, and if you buy it right, you will die, even if there are three daily limit suddenly.
Many people ask how to stop profit. There is only one standard for stop profit, which is larger than your stop loss. Just holding the mentality of making money is good, and you will never want to make money. Also, no matter how he messes with you, you have to mess with him even more. Frankly speaking, it is very difficult to make money in this market if you are not calm about making a lot of money into a loss.
The main money-losing groups in the market are those who don't know the so-called tossers and those comrades who always think that they can buy at the lowest and sell at the highest, and earn all the money in the market.
The market is a casino, and foreign exchange is gambling. Let's save those technical analysis, fundamental analysis, and historical data research. In the foreign exchange gamble, there are two conditions that greatly increase the odds of winning. The first is called "following the trend", and the second is called "probability".
The most important thing to pay attention to is how much capital you have, which is the most real. Because every profit is gambled with your rights and interests. There is no risk-free opportunity in the speculative market. The expansion of your transaction scale and the selection of transaction varieties are based on the growth of funds.
I don't think stop loss is a means to avoid being stuck, in my opinion, its function is to give me courage. I seldom use stop loss, but every time I must definitely hang it. Although it is difficult to trade at the price I hang, it is the source of all courage. Because that's the only thing I'm sure of in this uncertain game. Secondly, in this uncertain game, trading opportunities with a high winning rate are also the source of your courage and confidence.
Face up to the risk, since you have joined the market, since you have played the game. In the case of good fund management, you'd better be fearless, otherwise you will see bad graphics for a while, and you will be afraid of some news, so don't do it as soon as possible.
The easiest way is to find an effective rule (a system with positive returns) and cut the cake in the market. Don’t complicate the market. Use some simple rules to find a basis (a moving average is fine), die If you continue to do it with a clear mind, a light warehouse, and discipline, you will definitely gain something. Many masters in history have been so successful. You can make money in any way, but don't be in a hurry. If your knowledge is mixed, then I'm sorry, you will definitely be eliminated by this market.
It is very important to abide by the trading rules. Most people in this market are losing money. Fundamentally, it doesn’t matter what the central bank says or does. You must understand that your trading system is what you should abide by the most. Take care of your own business, the reason for admission is broken, and you have to leave as a matter of course. If not, then calm down, this is the calmness a trader must have.
When you really adhere to the trading rules, you are destined to have no common language with most people.
The so-called trading is psychological detachment: the first level is that like most people, they are entangled in the ups and downs of the market every day, talking about technical analysis, fundamental analysis and other things. The second level, including me and many people, use the rules to trade the market. Although they don't care about the turmoil of the market and can abide by the discipline, they are still bound by the rules. The third layer is the kind that has no rules.
I hope that everyone will be on the second level, and the third level does not belong to most of us.
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