In trading, the single trade result and the win-lose result are not the main focus of the systematized trader. What is their main focus? Is it the result of the system execution after 800 or 1000 trades, to look for the efficiency and results of the trade from more data, so that they can make long-term comments on their own trading system. For the first time traders, there is generally a trading mentality in the process of executing trend-tracking strategies. The inability to face their own losses, the lack of patience in the long run of a profitable trade, the inability to accept the ups and downs of their funds in the account, they hope that the money will rise quickly and then go into their pockets.
(1) Clear trend cycles
This is well understood, we all know that trend cycles include: daily, hourly, minute and second level trends. Because everyone's psychological tolerance is different, and the form of each level of trend representation is not the same, individuals may feel that the minute is better suited to them, while others think that the day is better suited to them. So before deciding on your strategy, the most important thing is to be clear about what your trend cycle is.
(2) Confirmation of the trend reversal
The so-called trend tracking can be understood literally, the tracking is the market trend. So how do we determine if the trend is reversed? First of all, we need to quantify indicators and signals (strategy) to suggest our trend reversal. At the same time, determining whether your trend tracking strategy is good or bad can also be determined by this signal.
3) Get a deeper understanding of your strategy
In real-time trading, you want to know clearly what stage you are at in the current market, what is the trend behind it? To know these, all you have to do is to know very well your trading strategy, the winning rate of the trade, the profit and loss ratio and the maximum withdrawal, etc. It's all like a finger. If once in the process of trading, a market appears beyond your expectations, this may indicate that the market may continue the current trend.
What is the purpose of trend trading? What is the key to it? For most trends in the existence cycle, it is possible to capture them as long as you apply trend tracking strategies. Symmetry, that is, you can capture most single high-profit trades. On the contrary, in trading, you always have losses, and no big trend gains are captured, then you can predict that your final trading result is a loss.
That being said, this also brings us to our focus on extreme trading in trend trading. Obviously, the source of trend tracking profits is extreme trading.
This shows that the key to trend tracking is tracking, and once the big profit moment occurs, it is necessary to stick to one until the reversal signal is touched, otherwise missing a few big profits will also greatly reduce the effect of the strategy. In fact, we have a strategy for extreme losses, which can be dealt with quickly, but can also increase the profitability of the strategy.
Finally, I want to emphasize that trend tracking is about being able to follow trends for 24 hours straight. In a future post, I will also discuss how to improve the profitability of existing trend tracking strategies.
Translated from WeChat