Systematic analysis and trading can only be achieved when the idea is fully appreciated. Once you have developed your own unique understanding of the nature of futures, your technical research and analysis and the systematization of trading will set the tone, and everything will be based on the idea. Since this article is about short-term trading, the analysis and explanation of the relevant topics are based on the trading strategy of short-term. So in the short term, what kind of philosophy should we establish?
My experience is that the essence of futures is the duel between the long and short sides, when the forces of the two sides are evenly matched, they are in a state of equilibrium, and when the power of one side breaks out, the formation of a continuous operation conducive to the other side, then a breakthrough is formed. To sum up, two sentences: long and short fights, balance and breakthrough.
Some people will ask, I understand both of these sentences, but how can they be effectively connected to future analysis and operation? I try to explain it in a reasoning way. Let's look at the concept we talked about above, long-short fighting, balance and breakthrough. This sentence seems simple, but in fact, it has already told us that in the future technical research and systematic design, it is the basis for analysis and trading to effectively distinguish between long and short positions and the advantages and disadvantages of the confrontation between the two sides. Only after achieving effective discernment, can we study or learn the tricks from others to be targeted, understand when to use, and avoid the confusion of thinking and trading caused by the inability to use the tricks alone.
The first thing in technical research is how to effectively distinguish the state of both bulls and bears through technical analysis. It has been said that changes in fundamentals can also be used to judge the shift in the power of bulls and bears. That's right, but this method of analysis conflicts with your trading ideas. Not to mention that it is difficult for us ordinary traders to grasp the fundamentals, if we look back at the concepts mentioned above, we will find that we are through the reflection of the market to help us analyze and trade, and the price has integrated the fundamentals, technical aspects and the performance of all market participants and directly displayed.
What do I want to explain in this passage? That is, there are many ways to make profits, but what method to learn or study must be obeyed by your philosophy, so as to avoid you from using this trick for a while in the trading process, and then using that trick, you may be able to make a profit temporarily, but in the long run, your trading is no longer systematic, which lays a hidden danger for the instability of future trading. Imagine that after you have formed your own trading system, when the system prompts you to trade, other analysis methods that are detached from your concept will inevitably interfere with your ability to execute the given trading system prompts, resulting in uncertainty in trading.
As an example, when the system asks you to stop your loss, but because the fundamentals support your losing position, you are likely to give up on the execution of the system, given the self-interest psychology that the average trader has. Since you are short-term, your focus should always be on identifying the state of the market and conducting analysis and operations accordingly.
Risks in the market
As a high-risk industry, we must be clear about where the risk comes from, so that we can avoid it and control it in a targeted manner. Only by controlling the risk can we finally achieve effective and stable profitability. When it comes to risk, the uncertainty of the market is usually thought of, but that's only part of the story. In the following, I will explain the composition of risk through an analysis of losses. To summarize briefly, there are three main categories of reasons for losses:
The technical level is as follows:
1. Frequent trading against the trend and unclear identification of market attributes, resulting in repeated sweeps of stop loss, rough trading system, unclear signal indications, and swinging execution of opening, holding and closing positions, resulting in low profitability;
2. Heavy positions at the capital management level, especially overnight and overdraft transactions;
3. Psychological gambling, luck, self-interest psychology, greed and can not always implement familiar trading routines. Summary of risk composition: contrarianism, heavy positions, suffering from sudden turns, rough technology and low profitability, gambling psychology, lack of discipline in trading.
Characteristics of market volatility
When referring to the understanding of the futures market, it was mentioned above that price fluctuations are essentially a contest between bulls and bears, when the power is balanced, the price will fluctuate in a range, and when a certain force erupts, there will be a breakthrough market. Therefore, the basic characteristics of price fluctuations are: balanced market (range shock) + breakthrough market (trend market).
All markets are converted in these two states, with a breakthrough after equilibrium, and then into equilibrium after a breakout, and then a breakout. In addition, these two states exist equally regardless of the period in which period, but the difference is that a balance with a large period can produce a large-level breakout, and a balance with a small period can only produce a small-level breakout.
When we see the breakthrough after the big balance, we can understand that there is a greater expectation of the follow-up market, and the trading strategy is naturally biased towards intraday bands or bands, rather than all (ultra) short-term, many people look in the right direction and do not make money, the fundamental reason is here, that is: the attributes of the market and the trading strategy do not match. If the small cycle is balanced and broken, the market level that is naturally supported will not be very high.
At this point, you ask, how do you effectively combine these two levels of balance and breakthrough? That is, after the balance of the large cycle is broken, at this time, if the balance of the small cycle also occurs, there is a breakthrough after the balance, indicating that the big breakthrough will be further continued in the short term. On the other hand, if there is a breakthrough after the balance of the small cycle, but the large cycle is still in the balance market, it can only support the general short-term operation.
The large cycle determines the attributes of the market, and the small cycle looks for the entry point. Without the cooperation of the large cycle, the space up or down after the breakthrough of the small cycle is not guaranteed. The characteristics of the balanced market that is, range shocks and fluctuations are: there are often N high (low) points of the finishing pattern, such as M head, triple bottom, platform, rectangular box, etc., the fluctuation characteristics determine how we participate in such a market, the preliminary conclusion is: the use of the pattern, back to the stop loss for high selling and low buying.
If it is a wide range, there will be a local small trend, homeopathic trading because in the range, the price space has not been opened, so: homeopathic local trend + short-term; breakthrough market is the trend market (also known as unilateral market), the characteristics of fluctuations are: upward trend market, low point up, constantly new high; downward trend market, high point down, constantly new low. Similarly, when the volatility characteristics of the breakout market were discovered, trading ideas and strategies basically surfaced. Since the trend market presents the above characteristics, there are two ways to make orders, one is to chase positions when there is a breakthrough, and the other is to sell high and buy low when the trend market has a pullback action.
Profit opportunities and trading strategies
Profit opportunities and trading strategies are large and small, some are common, and some will only occur in a specific environment, so it is necessary to identify and classify the trading opportunities provided in the market, and finally design analysis and trading ideas.
1. The main trading opportunity: Since it is the main trading opportunity, it must be: the market range is large, the duration is long, and it is relatively easy to identify, and the trader fully participates and obtains obvious benefits. After the definition, in fact, the answer comes out, that is: the main market segment in the trend market.
2. Secondary trading opportunities: Secondary trading opportunities refer to those that are not very large, but the number of occurrences is significantly greater than that of major trading opportunities. Traders accumulate gains by taking advantage of the rhythm of the fluctuations. In general, such trading opportunities exist in a wide range of swings.
3. Trading opportunities with fast money: Regardless of the market background, diving and pulling up are always the fastest markets for money, accompanied by aggressive handicap is its basic performance. This is what short-term traders aspire to the most, and it is also one of the focuses of future technical research.
4. Spam trading opportunities: Spam trading opportunities refer to small fluctuations and short durations. It mostly occurs in a narrow range of volatile markets, and it is the most likely place for continuous stop loss, so it is generally recommended to filter it out.
5. Risk trading opportunities: refers to the rebound or rebound under the contrarian local trend. There is a little room for fluctuations, but due to the local contrarian trend, if the technical foundation is not enough, can not grasp its rhythm, one is not the point earned, and the other is easy to be swept by the forward re-attack and forced to stop loss.
6. Skillful trading opportunities: Skillful trading opportunities are some non-mainstream and uncommon markets, which generally require traders to be experienced and respond quickly to grasp them. It is not recommended for beginners and can be filtered out. For example, if the main contract pulls up (or dives), the response from the contract is slow, and the contract is caught to make up for the rise (make up for the fall).
In real trading, people who do short-term trading often make money, but lose inexplicably, so how can they achieve long-term stable profits? The reason is that for different trading opportunities, the systematization of analysis and trading must be different, and the designed system is more targeted, so as to avoid making and losing money without knowing why.
On the one hand, this mentality will obviously interfere with trading, and on the other hand, it also reflects the lack of in-depth observation and summary of market fluctuations and trading opportunities. Because futures are a margin system, small fluctuations will also form large profits and losses, so most of the single-day markets are mainly shocks, and those trend (unilateral) markets occupy very little time in the entire daily K-line chart.
This reminds us that if we want to make a stable profit, we must be good at grasping the volatile market and pay attention to a high success rate. If you want to make a lot of money quickly, you must be able to effectively judge and participate in the main trading opportunities in the market, through the observation and research of many short-term masters, their profits have the following characteristics:
A single profit is not necessarily high, the number of transactions and the success rate is high, through the accumulation of small profits to achieve double, etc., this is in the general market; when the market has a big breakthrough, a single pure short-term is through the combination of short-term and band, pay attention to the rhythm of the grasp, although there are also leaks, but because of the increase in the band of trading, enhance the overall profit.
The commonality of the masters in the market
Understanding the commonality of the master's profitability is a very valuable participation in the subsequent design analysis and systematization of trading, as well as the formulation of trading rules and disciplines. The commonalities of the master's profit are:
1. Systematize analysis and trading;
2. Make full use of and implement the trading system to form a stable profit model;
3. Sufficient transaction preparation and summary, plan your trade, trade your plan;
4. Have clear trading rules and clear trading discipline, and fully and strictly follow the implementation;
5. Adequate and effective risk control measures;
6. Psychologically stable and aware of their own shortcomings.
Essentials of technical research
You must have this realization in your mind: it is difficult to make futures, but the techniques used by those masters are quite simple. What is special is that they systematize simple techniques, that is, clear analysis ideas, well-founded advances and retreats, and stable psychological support, and finally bring simple techniques into great effect. Judging the attributes of the market, which is the basis of subsequent analysis and trading, we have mentioned many times above, there are two categories of market attributes: balance market and breakthrough market, and the corresponding technical research points are:
1. Balance the judgment of the city;
2. The form of finishing, the various forms of finishing introduced in the reference book, such as: box, platform, triangle, flag;
3. Support and resistance in the form of support and resistance, and support and resistance in the form of price waves;
4. Grasp the inflection point;
5. Local homeopathy;
6. Aggressive market in a volatile market.
1. Judgment of the trend, technical breakthrough + forward increase in positions;
2. The main rising (falling) section is tracked, mainly with multi-period resonance;
3. Grasp the inflection point, and throw high in the forward direction;
4. Diving in the trend.
1. Futures are long and short fights, who helps whom;
2. Homeopathy rather than subjective prediction;
3. Sources of risk: heavy positions, overnight positions, sudden turns, rough technology and low profitability, gambling psychology, fluke psychology, and lack of discipline in trading;
4. The market is always in two states, either balance or breakthrough (the small balance of the small cycle supports the small breakthrough, and the balance of the large cycle supports the big breakthrough);
5. There are trading opportunities every day, but it is necessary to know which ones are of high value, otherwise they will be filtered out, which can effectively consider the risk;
6. Do familiar and sure of the market, don't do it if you don't understand it, and be familiar with two varieties;
7. Stable profits, and there is no good end to the psychology of getting rich;
8. Commonality of success: systematization of analysis and trading, adequate risk control, strict implementation of the trading system, and maintaining psychological stability;
9. Key points of technical research: design corresponding trading models for markets with different attributes;
10. Fund management: have a firm heavy position (1+1 or 1), and do not have a firm light position or do not do it.