Why do most trend trading systems have a win rate of less than 50%?

1. Chasing ups and downs

Trend trading does not care about chasing ups and downs, because there are higher highs and lower lows in the trend market. Positions that follow the trend can always be profitable as long as you wait patiently for the development of the trend. But if you don’t pay attention to the timing of buying and selling, enter the market at the top or bottom in the short term, and then the price retreats, and the position is locked; it will not only affect the mood and make the mentality unbalanced; it will also be a heavy blow to the confidence of holding positions.

Short-term tops and bottoms are generally caused by the collective buying and selling of the masses. Generally, when the trading volume suddenly increases, it means that the masses blindly follow the trend and enter the market. At this time, it is often at the cusp of some short-term speculative funds to make profits and close positions. Then the buying or selling orders of the masses are exhausted, and the price naturally retreats.

A good buying point or selling point should be established at the low point of the sharp drop in the upward trend, and short at the high point of the rebound in the downward trend, and pay attention to the 50% retracement of a trend market.

There are also many trends that are often arranged in a sideways manner when they are strong. When the sideways arrangement reaches an important average line position, it is also a good point to open a position when encountering the support or resistance of the average line. In addition, when the overbought and oversold values ​​are extreme, do not enter the market if the distance from the moving average is too far. Generally, there will be a finishing process that moves closer to the moving average.

Almost all losses are related to two points, that is, "can't see the trend clearly, and can't hold the position". I personally think that solving these two points is the right direction for the success of the transaction. I suggest that traders should record the trades that lose money, analyze what went wrong, and classify the losses, so as to know that "you will die there, and then never go to that place."

2. The trend market is too short or a false breakthrough

The trend market is too short. It should be said that in most cases, this is a retracement wash market in a higher-level upward trend; , is a false breakthrough.

Regardless of the situation, it can be said that it is a good time to establish a reverse position, and it can even be used as an indicator to establish a reverse position to make a profit. However, in terms of trading techniques, stop loss is required to be firm and decisive, to respond quickly, and to set support and resistance levels clearly and effectively.

In essence, a false breakthrough, a false trend in which the market is too short, is precisely because you are operating against the market in a higher-level trend, then the opposite direction is correct. False breakthroughs and false trends point out the correct direction of the market.

3. Appearing too early

Did not hold on to profitable positions. The second kind of loss is not a loss, but only making small profits in a round of big market trends with obvious trends is an important reason for the overall account loss.

In the process of trend development, as long as the trend starts to move in one direction, the most likely direction of the trend is still to move in this direction, which is the direction of least resistance. Here, mental issues and discipline are key.

If you want to secure a profitable trend position, you should have several disciplines and a good attitude:

1. Don't try to buy low and sell high for small fluctuations in the trend. This method often results in making many small sums of money and losing a large sum of money.

2. Don't try to catch the top and bottom, close the position after the trend has clearly reversed, give up 10%-20% of the profit after the trend band, and establish a new trend direction position.

3. Having confidence in the trend means having confidence in your own judgment, which is very important.

How many times have we held the entire trend market while watching the market every day? Many people closed their positions early when the trend had just started and made some small profits.

It is more important to hold the position than to judge correctly. Perhaps the best way is not to keep a close eye on the market and stay away from the market. Facts have proved that ostrich tactics on trend positions are often successful.

Therefore, stay away from the market. The nervousness and fear of loss caused by staring at the ups and downs of prices every day will make you have the urge to quickly close your position and pocket your pockets in pursuit of psychological comfort and security, resulting in premature loss of favorable positions Leave the field.

4. Buy the bottom and sell the top against the market

The first type of operation against the market is to buy the bottom and sell the top, which is the reason why most people lose money. In an obvious downward trend, you constantly think that the price is too low and buy cheap goods, or feel that the price has fallen too deep and rush to rebound; in an obvious upward trend, you constantly think that the price is too high and sell, or feel that the rise is too fast Go short; these are extremely risky trading techniques and habits.

Buying the bottom and selling the top is only effective in a sideways market, but even so, small funds and retail investors should not short when it is rising sharply or buy when it is falling sharply, but should wait for the price to rise to an obvious resistance level Short when the market is weak, or buy when it falls to an obvious support level and shows strength. This is the safe way.

If you operate with the trend, then you are most likely to be right countless times and make one mistake, only at the turning point; but if you operate against the market, then you are likely to be wrong countless times and get right once.

In view of this, the correct method should be to give up the first 10% or even 20% of the profits, and pursue stable and reliable profits along the trend; that is to say, one must wait until the trend is established before entering the market. This kind of profit will be less than that of the so-called masters who occasionally copy the bottom and sell the top, but it is indeed the most long-term stable profit.

Many people have suggested to me that it is difficult to see the direction of the trend. In fact, the definition of a trend is very simple and clear. An uptrend is a price trend in which the high and low points are constantly increasing, and a downward trend is a price trend in which the high and low points are constantly increasing. If you can ignore Small fluctuations and noise, in most cases, as long as you want to see, the market trend is very clear up, down, and sideways.

The reason why the trend cannot be seen clearly is probably because the observed time dimension is too short. For example, if you look at the 5-minute K-line, if you look at the daily K-line and weekly K-line, the trend is often clear at a glance.

5. Homeopathic positions were washed

The trend market will have a normal retracement arrangement. The coping strategy is to set the stop loss point and profit stop point according to the definition of the trend, and continuously increase the stop profit point during the development of the trend until the reversal cuts out the profitable position.

But sometimes there will be an excessive retracement in the market to exit your position, and then the market will return to the original trend. This situation often happens. After all, the market will not be as perfect as a mathematical formula. In this case, our strategy is to exit the market strictly according to the stop loss and take profit point and then re-enter the market again, and don't care about going long at a higher price or shorting at a lower price.

Financial transactions must overcome the weakness of human nature, hope, fear, regret, self-esteem and other emotions that hinder you from making profits in the market. Selling at 10 yuan and buying it back at 12 yuan is very psychological for many people. It's hard to accept, but if you don't, you may miss a large period of trending market.

On the whole, it is often inevitable to be washed out. However, how to deal with stop-profit and stop-loss is the key to deal with it. It proves that the position in the adverse market should be closed as soon as possible, and after being washed out and the price returns to the original trend, it should be re-entered.