The legendary woman who was reborn from the ashes

Sailing in the financial market is like a sophisticated navigator capturing the direction of the wind and sensing the rhythm of the waves. To steer this ship, we need to have rich experience, keenly perceive the subtle changes in the market, accurately capture the pulse of the trend, and thus develop appropriate trading strategies.

The rotation of oscillating trends and unilateral trends is like the change of seasons. However, their alternation is not as regular as spring, summer, autumn and winter, but is full of endless changes and complexity.

The alternation of strong and weak trends, the varying lengths of oscillation cycles, the unpredictable trends, the various patterns of sometimes rising sharply and falling slowly, and sometimes rising slowly and falling quickly, all make the trend seem shrouded in a layer of fog and difficult to grasp.

Because of this unpredictability, many people often feel confused and helpless during the trading process, not knowing when the trend will start and when it will end. They wander in the maze of thinking like trapped animals, unable to find a way out.

However, can we look at this issue from another angle? The purpose of trading is not to accurately identify every trend, but to achieve profit. Therefore, we do not need to waste our energy on the pursuit of perfection in identifying all trends, but should focus on one or two trends that we are good at and can steadily make profits.

In the trend that you are good at, there is no need to pursue the absolute correctness of every transaction. As long as our success rate can reach a certain level and the profit and loss ratio remains within a favorable range, then our transactions will be profitable overall.

Even if we only have a 50% success rate, we can still make a profit as long as the profit-loss ratio is greater than 1:1. Similarly, if we can maintain a 40% success rate and the profit-loss ratio reaches 2:1, then our trading can still be successful.

Once we change this way of thinking, trading, which originally seemed abstract and complicated, becomes concrete and actionable.

We no longer obsess over the pursuit of perfection and absolute precision, but instead focus on how to increase the success rate and optimize the profit-loss ratio.

Start researching technology in a targeted manner, looking for methods and strategies that can help us better identify and exploit trends.

This process requires identifying the beginning of a trend. The earlier you can intervene in the trend at the start-up stage, thereby obtaining greater profits.

This does not mean that you must grasp the starting point of the trend completely accurately. What you should strive to do is to get as close to this starting point as possible to reduce the stop loss space and reduce transaction costs.

Through such a change in thinking and technical research, we can not only see the context and direction of the trend more clearly, but also remain calm and rational in trading and not be disturbed by market fluctuations.

We can move forward steadily on the road of trading and gradually achieve our profit goals.

When we deeply analyze the market trends, it is not difficult to find a pattern: once the market becomes clear, the subsequent profit and loss ratio will often show a significant amplification effect, thereby improving the overall effect of the transaction.

This phenomenon is common in daily transactions, and the logic behind it is worth our careful consideration.

We are faced with two different stop loss settings: 30 points and 25 points. From a numerical point of view, the difference between the two seems insignificant, only 5 points. However, when calculating the profit and loss ratio, this small difference can cause a huge difference.

If the market can run to 100 points and close the position smoothly, then the 30-point stop loss transaction will show a profit and loss ratio of 3.3:1, which is enough to achieve a success rate of about 25% in the trading system and thus reach the break-even point.

When we compress the stop loss point to 25 points, the profit and loss ratio jumps to 4:1. Although the success rate may drop slightly to 20% at this time, it is still enough to ensure break-even.

For many friends who are struggling in the trading market, improving the success rate of the trading system by 5% is often a daunting challenge. In long-term practice, we have summarized a relatively easy and effective method - identify trends earlier and enter the market as soon as possible.

By doing this, the stop loss space can be reduced to a certain extent, thus laying a solid foundation for improving the profit and loss ratio.

On the technical level, it is also necessary to pay more attention to identifying the beginning of a trend. In fact, it is often more valuable to identify the beginning of a trend than the end of a trend.

Because once you successfully identify the beginning of a trend, you can seize the opportunity to make a profit; when the position reaches the predetermined profit and loss ratio, even if the trend has not ended yet, you can exit decisively and lock in profits.

This strategy not only guarantees profits but also avoids losses that may result from excessive greed.

Before discussing these technical issues, let’s review the basic rules of trend and oscillation. The two often appear alternately, that is, after a long period of oscillation, a trend market often begins;

When a trend has been going on for a long time, it may enter a period of volatility, marking the end of the trend. Identifying the beginning of a trend is actually equivalent to identifying the end of volatility.

In actual transactions, the trend of the market can be judged by observing the market's trend characteristics.

When the market is in a state of shock for a long time, it can be considered that the probability of a future trend is increasing. This is because the shock trend often has some obvious characteristics, such as the price remains in a relatively stable range, or there are frequent false breakthroughs.

Technical indicators may also frequently cross and blunt during periods of volatility. By combining these characteristics, the beginning and end of trends can be more accurately identified, allowing for more effective trading strategies.

When the divergence indicator sends a warning, it reminds us that the market forces are tending to balance, which indicates that the market may be brewing a major change. In this context, the first tool to identify market trends is the analysis of sideways breakthroughs.

Sideways trading is like a brief calm before a storm, and is a critical stage for the accumulation and transformation of market forces. Various K-line combination patterns, such as top and bottom reversals, are observed. These patterns are like undercurrents in the sea, indicating possible future market directions.

During the sideways movement, the market is in a state of shock, like leaves swaying in the wind. But once the pattern is broken through, just like the wind stops and leaves fall, the market will start a clear trend. At this time, the downward consolidation pattern in the bullish trend or the upward consolidation pattern in the bearish trend will become our preferred trading.

How to judge the end of the sideways trend? The answer lies in the breakthrough of the sideways pattern.

To identify indicator divergence, you need to pay attention to a series of important technical indicators, such as MACD, RSI and stochastic indicators.

These indicators help us interpret the market's momentum, overbought and oversold conditions, and the strength of price fluctuations. When the market price deviates from these indicators, it is like an undercurrent in the ocean, suggesting that the power within the market is shifting and the trend may be about to reverse.

After the consolidation pattern has accumulated dozens of K-lines, the pattern becomes clearer, and then we look for the breakout point to enter the market. Only by seeing more details of the picture can we make a more accurate judgment.

To understand the true nature of indicator divergences, you need to carefully observe the subtle differences between price trends and technical indicators.

In an upward trend, if the market price reaches a new high, but the technical indicators fail to reach a new high at the same time, or even show a downward trend, this is a divergence between the price and the indicator. This divergence often indicates that the upward trend is weak and the downward trend is quietly approaching.

The divergence phenomenon is not limited to a single time period; it may manifest itself differently in different time dimensions.

From short-term to medium-term, and then to long-term, each cycle may hide divergence signals. Traders need to choose the most appropriate time period to focus on based on their trading strategies and risk tolerance.

Generally speaking, long-term divergence tends to have more predictive value than short-term divergence because it can more accurately reflect the accumulation and changes of long-term market forces.

Secondly, choose simple patterns for trading. Just like doing easy questions first in an exam, we should also give priority to trading those patterns that are easy to identify, have small stop losses and large profit margins. Even if we encounter complex patterns, we can deal with them calmly to ensure the robustness of the transaction.

Another way to identify trends is to observe the unilateral movement of trends. The market cannot rise or fall forever. When a trend runs for too long, its strength will gradually run out, and at this time, there will often be a top-bottom reversal or a deep callback. By grasping these key nodes, we can discover the change of trends in time and seize the opportunity in the market.

In short, through comprehensive analysis of indicator divergences, sideways patterns and trend operations, we can more accurately identify market trends and formulate corresponding trading strategies.