How to filter out the "noise" in the market and choose a better entry point?

Starting from your question, I will briefly talk about my opinion.

First of all, I agree with your so-called big cycle to look at the trend, and small cycle to find entry. A large cycle needs at least a daily line, and a small cycle should not be too small. A 1-hour chart is enough.

So why does using moving averages and breakthroughs to enter the market on the 1-hour chart have little effect? In fact, it still lies in the disorder of price fluctuations, which is particularly obvious in small cycles. So you can consider raising the cycle up again, and it may be good to look at the 4-hour chart. This is a way of filtering out noise, i.e. the larger the period used, the more disorderly fluctuations are filtered out.

If you're still used to looking at the 1-hour chart, that's fine too. At this time, the moving average you use can increase the period and use this to filter the shock. I don't know what period the moving average you are using is, I usually use parameters above 200, you can take a look at the effect.

A very simple moving average, using the Fibonacci number 233, shows a short position below the moving average, and a long position above the moving average. Basically, it can undertake the market very well and will not miss the entry point. But if you are using a small parameter moving average, seeing disorderly fluctuations may cause the moving average to shuttle back and forth and cause too much interference.

Of course, I may need to add a shock indicator during the specific operation, and wait for the price and the indicator to match before entering the market. A good strategy still needs to be verified by oneself for a long time, and it will be polished slowly and naturally.

The topic of noise is too broad, and there is no standard answer for specific entry points. It does not mean that the effect after you enter the market is not good, but it is caused by noise. The relationship between them is too convoluted, and a linear explanation is definitely not appropriate.

I don't know what you mean by the effect in general, because filtering noise varies from person to person, and it doesn't mean anything if you don't do it well. The effect of the same entry strategy still depends on the person, and there is no better entry method in the market.

In fact, for the market, most of the market fluctuations can be attributed to noise.

The noise comes from the disorderly fluctuation of the market, which will break through any analysis framework, and you must rely on faith to make it to the end. But the torment of human nature caused by faith is beyond what ordinary people can bear. Noise can destroy any investment logic you have, and it can force you to abandon your beliefs. If the temptation brought by market noise is superimposed, I am afraid that most investors will find it difficult to control.

What you want is how to extract truly valuable information from a lot of noise in the market to help you make better decisions.

But there is no ultimate answer to this problem, because many times signal and noise are mixed together like milk and water, and there is no way to completely sort them out, but there are still some ways that can help.

1. Relatively long time frame

When looking at the weekly, daily and minute lines, the smaller the period, the lower the signal-to-noise ratio, so since you want to improve the cost performance, do the opposite and look at relatively large periods.

There is no standard answer for what kind of cycle to use. It is related to the time each person can invest, his investment ability, and his understanding of investment. For example, for a person who is very busy at work, he may use the weekly line to do it, which is suitable for him. But as a professional player, it may be a more appropriate cycle to use the hourly line.

All in all, when you amplify the period, your signal-to-noise ratio improves.

2. Some technical indicators to reduce noise

One of the characteristics of noise in mathematics is that it is random. Since it is random, it can be reduced by some mathematical methods, such as the average method. The average method cancels out a part of the positive and negative noises.

What we usually use the most is the moving average. For example, if you construct a 20-day moving average to observe the trend, its fluctuation is obviously much smoother than the daily price fluctuation, because it reduces the noise.

3. Subjective noise reduction.

It is how to subjectively improve the signal-to-noise ratio in your heart.

We sometimes describe a person who is particularly sober when making decisions. It is similar to the feeling of seeing the blue sky through the clouds and mists you mentioned. The word "clear state" is used. Buddhists also like to use this word. It sounds a bit similar to the state of enlightenment.

In fact, clarity or enlightenment refers to a state where a person's inner noise is particularly low.

According to a study, there are 60,000 thoughts in a person's mind in a day. You can imagine such dense thoughts, more than flies. How much noise there is in a person's heart.

So even if the quality of the external data remains the same, if we can reduce the noise in our hearts and move towards a state of clarity, it will also help us make better decisions.

Therefore, in the face of market uncertainty, you can abandon the market noise, this is the master of investment who has fully realized.