What is the impact of increasing positions against the trend and increasing positions against the trend on the "winning rate" and "profit-loss ratio" respectively?

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Regarding the increase of positions against the trend, it is necessary to have a prerequisite for analysis.

"What is a counter-trend?" Our traditional understanding of a counter-trend may simply be that there is a reversal pattern or a small segment of a reversal trend in the current cycle of the trend market, which we consider to be a counter-trend.

But in fact, we should be more concerned about whether the current market is really ending the next market trend in the big cycle in the current market? When the large-cycle trend has reached the relative limit position, we can switch to the small cycle for "so-called counter-trend (anti-major-cycle direction) trading". The premise of such a transaction must be that there is a key support pressure ahead. It is possible to place a relatively small stop loss. Before trading, we must consider the risk of this order and the approximate position or points of exit. Comprehensively analyze whether the profit-loss ratio of this order can reach the ratio we have quantified. If it is completely ok in your trading system, then you can trade; the problem we usually encounter in this kind of operation is false signals Stop loss frequently. Then we must give ourselves a rule or I will give a fixed stop loss value to trade against the trend several times, or what kind of signal appears is a high probability reversal signal that we can carry out.

If you enter the market against the trend and want to increase your position to fight for a new trend, then fund management is very important. The simplest way is how much is my stable income for the first order, and the second order What is the approximate risk of re-entering the market? Consider it comprehensively to see how much you can bear. If you both hit the stop loss, is the risk within your risk control range? If it is determined that the trend is on, then your profit-loss ratio will be very impressive.

It is easier to increase positions with the trend than against the trend, and you can use the rhombus increase method. What needs to be considered in the process of following the trend is what stage (beginning, middle, and end) is your position in the current market trading, and control your position to reasonably control unnecessary losses is more critical. In terms of the profit-loss ratio in the trend increase position, it is still important to consider when this market is likely to end or whether this market can be traded from a small cycle to a large cycle. This is the key.

In short, the winning rate of increasing positions against the trend is lower than that of increasing positions against the trend, but the profit-loss ratio will be much higher. There are many markets where you will catch the starting point. However, taking advantage of the trend to increase positions can be relatively stable and can reduce a large part of the risk. Another point is that you can try to maintain the original trend order in a large cycle and make some contrarian orders in a small cycle (the premise is that you must understand the risks and understand that you are in a dangerous situation in a contrarian market and you must stop losses in time).

The question is really a good question. To express it clearly requires a lot of words and pictures. Here I just briefly explain some specific details in a big frame. It still needs traders and friends to slowly try to combine their own trading system to continuously improve.

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Last updated: 08/23/2023 08:25

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