To excel in trading, it is crucial to understand the importance of trends. Only by staying within your trend can you be protected and not have to worry in a relatively short period of time. As long as the trend remains intact, there is no need to rush to exit. Fluctuations within the trend are normal; sometimes the stock price rises a bit, and sometimes it falls a bit, which is nothing to be overly concerned about. Generally, trend traders do not need to watch the market constantly. They can just take a glance at the opening and closing of the market each day, and as long as the trend is not broken, there is no problem.
Of course, you can also make short-term and ultra-short-term trades based on the trend. It is also possible to trade long-term in a short-term manner. This still needs to be analyzed specifically according to the situation of individual stocks. Some stocks really need to be exited first in the short or ultra-short term, while others can be held completely and allowed to run for a longer period. As for what cycle to operate in, it depends on three aspects: first, refer to the index market; second, consider the specific situation of individual stocks; and third, consider your own buying timing and entry point. It is not appropriate to use the same short-term, ultra-short-term, wave, or medium to long-term strategy for every stock. Specific issues should be analyzed specifically, and corresponding tactics should be taken according to the trend and shape of each stock, which is more likely to succeed.
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Now let's talk about the trends in stock price movements. In fact, it is very simple, and there are basically four types of trends.
Chaotic trend. You may say that chaos is not a trend, but is chaos not a trend? In fact, chaos is a major trend, greater than the invisible. The stock price has no direction, no rules, and no shape. If you want to draw a line, you will find that you can't start. This is the chaotic trend. Chaotic trends need to be avoided, whether it is an index or individual stocks, there is no need to participate. In fact, chaos is the early stage of the formation of the trend, and all forces are brewing. At this time, it is not possible to trade, just like a chick hatching eggs, you'd better not disturb it. Once the chaotic period ends, a real trend will inevitably emerge.
Next, let's talk about the other three trends. These three are the ones we often encounter, see, and can understand. Oscillatory trend. It is the stock price that oscillates repeatedly within a certain area, basically a rectangular outline of the trend, with a pressure line on the top and a support line on the bottom. If you participate in the trade in this trend, you can sell high and buy low, and repeatedly do small waves. But there is a detail here, that is, the oscillatory trend is also wide and narrow, long and short, and different strategies need to be adopted according to these. Especially for wide-range oscillations, it is a bit of a loss to stay completely still, so it is better to buy low and sell high, otherwise, you will repeatedly take the elevator. If it is a narrow oscillation, you can also hold still. Of course, you can also play ultra-short or T+0 inside, which still needs to be determined according to everyone's situation and trading style.
Upward trend. If you observe the operation of the stock price for a few days, although sometimes it goes up and down, today it closes with a negative line, and tomorrow it closes with a positive line, the overall stock price still runs in a certain direction, with pressure on the top and support on the bottom, which is the area where you can stay at ease. If you draw two lines, you will find that you can draw a pressure line on the top. If it is an upward trend, it can also be called a regression line. When the stock price reaches this area, it is likely to turn back and then run down. You can draw a trend line on the bottom. When the stock price continues to run for a period of time, it will inevitably break this situation, that is, change the track, or accelerate upward, break through the regression line, or run down, break through the trend line, which is when you need to adjust your position. An upward breakthrough can consider increasing the position appropriately, and a downward breakthrough can consider clearing out.
Downward trend. This is also a very obvious trend, with a trend line on the top and a regression line on the bottom. The stock price is lower than one high point than the previous one, and the low point is also lower than the previous one. Can't you see such a trend? But some retail investors still buy and go long in this area, there are so many horizontal trends, upward trends, why not choose? So, it is very important to first look at the trend in stock trading, and on the basis of basically determining the trend, and determining the overall trend, and then select individual stocks, so that the chances of success are greater, and the chances of winning are greater.
So in trading, the first thing to master is the overall perspective, first look at the macro, and then look at the micro, so as to coordinate the overall situation, and be more proactive in actual operation, and not always be in a passive and losing situation. It is very important to seize the initiative and strive for the right to take the initiative in actual operation. Only by taking the initiative can you have a basis for advancing and retreating, and only by doing so, and acting according to instructions, can you achieve the unity of knowledge and action. Only the transaction that achieves the unity of knowledge and action is a successful transaction.Trading in stocks essentially comes down to trading trends. Long-term trading is about following major trends, while short-term trading is about following minor trends. Today, I'd like to share a simple and effective trend line trading method with you, which is genuinely practical!
1. Trend lines can be categorized based on their direction: upward trend lines, downward trend lines, and horizontal trend lines.
2. Trend lines can also be classified based on their duration: long-term, medium to long-term, medium to short-term, and short-term trend lines. Generally speaking, a trend that spans more than 6 months is considered a long-term trend, one that spans 3 to 6 months is a medium to long-term trend, one that spans 1 to 3 months is a medium to short-term trend, and one that spans less than a month is a short-term trend.
The market significance of trend lines, the two most basic market meanings of trend lines are:
1. Trend lines represent the direction of stock price movement.
When stock prices move upward, connecting the same level of low points forms an upward trend line, which shows the characteristic of the stock price moving upward. When stock prices move downward, connecting the same level of high points forms a downward trend line, which shows the characteristic of the stock price moving downward. When stock prices move horizontally, connecting the same level of high and low points forms a horizontal trend line, which shows the characteristic of the stock price moving horizontally.
2. Trend lines have a distinct support and resistance effect, and support and resistance can be converted into each other.
When the stock price stands above the trend line, it acts as support. In an upward trend, the stock price often receives support and rises again every time it adjusts to the upward trend line. In a downward trend, the stock price is pressured to fall every time it rebounds to the downward trend line. In a horizontal trend, the stock price often moves between the upper and lower tracks formed by the trend line. When the stock price falls to the lower track, it receives support and rises, and when it rises to the upper track, it is pressured to fall.
Furthermore, the support and resistance effects of trend lines are not fixed but can be converted into each other. When the stock price stands above the trend line, it acts as support; when the stock price breaks through the trend line, it acts as resistance.
The important patterns and significance of trend lines:During the operation of stock prices, different stages form different trend lines, and the patterns formed by these trend lines often have special market significance, which has an important impact on investment decisions.
We recognize the market trend, and as for the indicators to grasp the trend, the most effective is the "trend line".
The so-called trend line is a line drawn according to the trend of the stock price fluctuation. The purpose of drawing the trend line is to find the appropriate selling and buying points according to its context. Trend lines can be divided into upward trend lines, downward trend lines, and horizontal consolidation trend lines.
The functions of the trend line are:
1. Determine the timing of buying and selling. (Can sell high and buy low)
2. Determine whether the trend is likely to reverse. (Exceeding 3%-5% of the range) (Breaking through the support line may turn into a fall; breaking through the pressure line may turn into a rise.)
3. If a gap occurs when breaking through the trend line, a reversal trend is very likely to appear, and there is a certain strength after the reversal.
4. If the stock price breaks through the pressure line and wants to turn into an upward trend, it often requires a large transaction volume to cooperate. And breaking through the support line and turning into a decline generally does not require a large transaction volume.
Understanding the trend line is very important for stock investors, and the function of the trend line is also very much. Today, I will share with you how to use the trend line to accurately grasp the buying and selling points?
1. Whether in an upward or downward trend channel, when the stock price touches the upper pressure line, it is the time to sell; when the stock price touches the lower support line, it is the time to buy.2. If within an upward trend channel, it is observed that the stock price breaks through the upper pressure line, it proves that a new upward trend line is about to be generated.
3. Similarly, if within a downward trend, it is observed that the stock price breaks through the lower support line, it may indicate that a new downward trend channel is about to be formed.
4. During an upward market, each wave's peak will be higher than the previous one, and each wave's trough will be higher than the previous one; whereas during a downward market, each wave's peak will be lower than the previous one, and each wave's trough will be lower than the previous one.
5. Within an upward trend channel, if it is observed that the stock price cannot touch the upper pressure line, it indicates that the upward momentum is weakening.
Trend LineBecause the trend of stock price changes has a direction, it is possible to represent this trend with a straight line, which is called the trend line. In the stock market, veteran investors all know that when trading stocks, one must "go with the trend," and not "act against the trend." The so-called "trend" here refers to the general direction and trend, that is, the direction of the stock market movement.
The direction of the trend is divided into upward direction, horizontal trend (i.e., no trend), and downward direction. The correct trend line needs to connect two or more peaks or troughs.
Trend Line Buying Timing
(I) Buying timing of the upward trend line
In our country, considering that there is no short-selling mechanism at present, investors can only make money by buying low and selling high when trading stocks. Therefore, it is particularly important to select individual stocks with an upward trend. That is to say, when selecting stocks, one should choose those with each subsequent peak and trough in the K-line chart being higher than the previous one (i.e., one bottom is higher than the last).
By connecting two consecutive low points of a stock with an upward trend in sequence, an upward trend line can be drawn.
Generally speaking, the upward trend line has a certain supporting effect on the stock price. After the formation of the upward trend line, the stock price will operate above the trend line for a period of time. From this, we can select individual stocks above the upward trend line.
1. Buy near the upward trend line.After an upward trend line is formed, the stock price will follow this upward trend line. However, during the process of moving upward along this line, the stock price may experience a short-term pullback, often falling back near the trend line, and sometimes even dropping below the trend line. When selecting stocks, if investors can confirm the effectiveness of the trend line, they can wait for the stock price to return near the upward trend line, and then enter in the short and medium term.
2. Choose stocks that quickly rebound to above the upward trend line with a medium or long yang after breaking through the upward trend line.
Nowadays, more and more major forces have observed that many small and medium investors will use the upward trend line to select stocks. Therefore, when they operate, they often deliberately smash the stock price through the upward trend line. This can play the role of washing out some of the less firm followers.
3. In the medium-term upward trend, when the stock price pulls back without breaking the upward trend line and stops falling and rises again, it is the time to buy.
In the medium-term upward trend, the low and high points of the stock price are constantly moving up. Connecting two obvious low points that are constantly moving up forms a straight line that tilts to the upper right, which is the main upward trend line and will become the support when the stock price is adjusted. When the stock price pulls back each time to this line without breaking through the line and stops falling and rises again, it is the short-term buying opportunity in the upward trend.
Buying opportunity of the downward trend line
When the stock price breaks through the downward trend line on a certain day with an increase in volume, it is a buying signal.
Buying opportunity of the horizontal trend lineStock prices operate over a long period, and each time they surge to a certain price level, they are met with resistance and fall back. Connecting these several high points forms a horizontal trend line.
When the stock price breaks through this horizontal trend line upwards with increased volume on a certain day, it is a buy signal.
Summary
When applying the trend line selection criteria, it is important to first clarify whether the break below the upward trend line is real or fake. If the stock price slightly falls below the upward trend line, consolidates around the trend line, and can stabilize above the upward trend line within a week after the break (the shorter the time, the better) with a medium or long positive candle, and with volume cooperation, it is a fake break. Similar fake break stocks may start a short-term retaliatory rise when the stock price returns to the trend line.
Avoid consecutive stop losses and let profits run
I believe that both novices and veterans have encountered the situation of consecutive stop losses. Especially for novices, facing consecutive stop losses is more likely to lead to emotional and retaliatory trading, which is very fatal for trading. This is also why fund management and risk control are the top priorities of the trading system, and it is also a professional quality that a mature trader must have. Even if there is a so-called "one trick to eat all over the sky" in the market, it will also be invalid at some point, so there is no method in the market that can be universally applicable, and even your most proficient market may not be right every time.
For a trader who has been in the market for many years and has the ability to make a profit, occasional consecutive stop losses are normal, and this is the necessary cost before making a profit. Because in many cases, the trading opportunities you call for are not something you can grasp at once, and it requires you to pay a certain cost. However, traders with the ability to make a profit are not afraid of consecutive stop losses. They will immediately stop trading, adjust their mentality and emotions, find the reasons for consecutive stop losses, and at the same time, they also know that this is inevitable. Through rigorous risk control management, they allow themselves to lose less and less, and consecutive stop losses will not cause too much damage to them. Once they do the right thing, they will make up for the previous losses, and not only cover the previous losses but also have a surplus. They will not only experience consecutive stop losses but also consecutive profits, and usually, the profit margin is much greater than the stop loss margin, so their mentality and emotions are very stable because they have a stable profit system.
If you only lose 10 points at a time and can earn 100 points when you make a profit, what's there to be afraid of even if you stop consecutively 10 times? (The premise is that you have a stable profit system) Doing it right once can make up for several losses. Moreover, sometimes you can make consecutive profits several times, which is enough for you to stop many times. So why are some people so afraid of consecutive stop losses? It's just because they don't have the ability to make a profit. The orders that could have made a big profit can't be held, and they leave in a hurry after only making a little profit. When they stop consecutively, they give all the principal and profit to the market, and the principal is also greatly damaged. Most people are tortured by the market and their enthusiasm for trading is extinguished. The money for consecutive stop losses is also hard to earn back, so they are very afraid and uneasy.
But this is a problem that every trader must face bravely, from loss to profit, they must go through this process. When you lose to the point of blowing up the warehouse, you will realize that trading can not only make quick money but also lose money quickly, and then you will realize the importance of risk control, and then end the loss stage and start to break even, and then slowly move from breaking even to making a profit. So, you must first do a good job in risk control, and it's never too late to do the right thing. Only by doing a good job in risk control can you have the opportunity to make money in the market.After you have implemented risk control, how do you cut losses and let profits run? Cutting losses and letting profits run, in other words, is holding on to profits, which is about the profit-to-loss ratio. When you lose, you lose 10 points, and when you profit, you earn 100 points. However, holding on to profits is the most difficult part of the system because it involves human nature. At the beginning, it is hard to achieve stable profit-holding just by your perspective and willpower. After all, the desire to win and fear of losing is a human weakness. It is very uncomfortable to watch a profitable trade change from a floating profit to a floating loss. Only some traders can achieve this with their strong psychology and courage. For most people, they need to rely on trading rules, such as adding or reducing positions according to the strength of the K-line trend, or holding positions based on the moving average. As long as the moving average is not broken, continue to hold on to profits, and try to let profits go further with the market trend.