If we compare it to an iceberg, we’re all floating on water.
What you learn will not be in vain, and it will give you unexpected surprises on your future trading path.
In fact, the focus is on the selection of trading strategies and trading opportunities.
Today, let’s talk about how to develop the right trading strategy in the case of market ups and downs?
How to choose the right time to trade?
5 Steps to Determining a Trading Strategy 01. Determining the Current Economic Fundamentals News The emergence of fundamentals often brings large volatility.
This is serious if you have no idea what is happening in the market and devote yourself to technical analysis, but the result is likely to be nothing.
Work should be divided into priorities.
We should also look at causality in the market and the importance of different factors when trading.
Many friends ask, “What happens when technology and fundamentals clash?”
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In fact, if you can understand cause and effect in the market, you won‘t struggle.
The K chart is an indication that it is influenced by fundamental information and market sentiment.
Therefore, fundamentals and market sentiment are due, while technicals are actually the analysis of the outcome.
First, we should pay attention to possible fundamental information on a weekly basis, and then when we come across fundamental information, we must prioritize them.
Fundamental news to watch includes key economic data releases, speeches by officials, geopolitics and international relations, and developments in the United States.
02. Get Your Mind Right A lot of times, we don’t know if the failure of a trade is caused by the mind of the trade.
Actually, there’s no need to struggle.
Maintain internal stability in the transaction.
Every trade is carefully analyzed and does not follow the crowd blindly.
This is a good psychological state. The psychology most often mentioned in investment trading is greed and fear, which also has the biggest impact on market prices.
In addition, we also need to be alert to the influence of psychological factors such as not admitting failure, counting money, trying, following the crowd, dependence and carelessness.
Without the baptism of the market, even learning more ways to overcome the psychology of trading is not much use.
It is easy to understand the trading psychology, methods and principles that arise from market sentiment, but many people do not, and this is the most difficult to control.
So it also depends on mind and talent.
After the above factors are determined, you can’t rush into the market!
Deals rushed into the market without careful analysis will quickly become obsolete.
It’s easy to focus now.
When you see the current market trends are relatively clear and a lot of people are following orders, you can’t help but jump into the market.
But the market will soon slap you in the face.
So, before entering the market must do careful analysis, specific analysis of what?
03.
Determine Market Direction Most trades always follow the trend suggested by Dow theory, buy low, sell high.
K chart forms and technical indicators can be used to determine market direction.
Instead, a K-chart can give an initial signal, which then needs to be confirmed by technical indicators, which can be divided into leading and lagging indicators.
As the name suggests, leading indicators give early market signals, but they can be false signals, such as MACD, RSI and KDJ indicators.
Lagged indicators can be used as confirmers of the final signal, such as MA, Bollinger band indicators, etc.
When determining market direction, USE large time periods, such as 4-hour charts, daily charts, weekly charts, etc.
4. Timing your Trade After determining the direction of the market, the next step is to identify entry opportunities.
Be careful not to think that you are smart enough to judge market opportunities before the trend is certain and that the market direction will follow the direction you want.
This so-called “head start” is actually the psychology of the gambler.
Market trends are truly unpredictable.
If you want to do that, you have to have enough risk tolerance.
The breakout of K-chart continuity and reversal pattern can customize the entry opportunity for us, but we must guard against false breakout situations.
At the same time, you can also use the breakout of shock indicators to analyze the entry opportunity, such as the MACD two fast and slow line alternating moment, RSI and KDJ overbought and oversold signals are good analysis methods.
Generally, small time periods are used to select trading opportunities, such as 30-minute charts, hourly charts, etc.
Of course, if you don’t want to switch back and forth, the 4-hour chart is recommended.
For studies of K-line persistence and reversal morphology, a large time frame of at least 4 hours should be used.
05. Stop Profit and Stop Loss strategies We said that trading should find ways to avoid greed and fear, and stop profit and stop loss are one way to do that.
The Fibonacci retracement line (gold divider) is the most common way to set stops and losses.
Regarding fixed and randomly adjusted stop-loss, I prefer fixed.
Because what was the original purpose of a stop loss?
To avoid losses caused by market reversals and set the most affordable loss point, and the safest profit point.
If you are constantly adjusting your stops and losses, you are actually being led by market sentiment.
Of course, there are also very skilled, can adjust according to market conditions, in order to maximize profit.
Don’t be in a hurry to do forex, don’t envy those who make money to show off the wealth of traders, do all the above work first.
Investors still focus on Omicron, two factors may guide the market theme.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
