The market spends most of its time in a state of fluctuation, with only a few moments showing a clear trend. The fluctuating market is not as popular as the trending market because it is more difficult to grasp and more elusive than the trend. However, fluctuation is the norm of the market.
The essence of fluctuation is the balance of bullish and bearish forces or a dull trading session. Especially the timing and location of the balance of bullish and bearish forces have different meanings. Handling fluctuations should be based on time, location, trend, risk, and different traders, with no fixed trading routine, only a principled approach.
It is necessary to determine your own fluctuations and trends.
Determining your own fluctuations and trends is the first step! What is fluctuation, what is a trend; what conditions are the signs of the emergence of fluctuations, which need to be vigilant, what conditions are the high probability of fluctuations, and what conditions are the confirmation of fluctuations; what conditions are the signs of the end of fluctuations, what conditions are the high probability of the end of fluctuations, and what is the confirmation of the end of fluctuations. What tools to use, Dow Theory, moving averages, trend systems, or other indicators.
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This step is not difficult, as trends and fluctuations have obvious differences in indicators. The initial performance may require repeated observation and confirmation, but once the market is determined, the next step is just the specific operation.
Observe the cycle and judge the impact of fluctuations on operations.
If this cycle is a fluctuation, then for the previous cycle, it is likely just a part of the trend, and for the next cycle, it may be several trends. Therefore, different cycles require different treatment methods.
For the current cycle, the strategy is to sell high and buy low, using fluctuation tools for fluctuation trading; for the previous cycle, follow the general trend and use trend tools for trend trading; for the next cycle, follow the minor trend and use trend trading.
Different locations of fluctuations require different treatment methods.The emergence of resistance and support levels can easily lead to a fluctuating market direction. Generally speaking, one should have already entered the market before the fluctuation is recognized. As the market oscillates, the fluctuating trend gradually reveals itself. If a stop loss is encountered at this time, then patiently wait for the end of the fluctuation to see the opportunity to enter the market.
Fluctuations at the end of the market usually imply that the next reversal is about to come. In gold or currency trading, pay particular attention to the fluctuation at the end of the market in the top or bottom range. It is common to have a large bullish or bearish candlestick that breaks through the fluctuation in line with the trend, creating an illusion of the trend continuing, and then the price slowly falls until it engulfs the large bullish or bearish candlestick. In the face of a rebound market, do not hesitate, enter immediately, and set a stop loss at the top.
Deal with fluctuations according to the size of the risk.
If the market starts to fluctuate as soon as a new position is established, it indicates that the timing has not been well grasped. Because the position is unstable in the fluctuating market, it is necessary to set a time stop loss or a price stop loss at this time.
If the position has already left danger and can protect itself but has not reached the target, then it is necessary to deal with it according to the situation during the fluctuation. If it is at the beginning of the fluctuation, it might as well exit as soon as possible; if there are signs of the end of the fluctuation, it might as well hold on and see.
The difficulty of trading in a fluctuating market is very high. In particular, participating in too many fluctuating markets can waste energy, confidence, and patience, leading to a lack of preparation and poor performance when the trend opportunity comes, which is not worth it. However, the difficulty lies in the fact that the fluctuating market and the trend market are seamlessly connected, and there will be no obvious prompts. The key to correctly using trading strategies is to be prepared in advance. One cannot assert that it is difficult to make a profit in a fluctuating market based on personal experience, while the trend market is easier.
Some people are good at operating trends, and some are good at operating fluctuations. It is necessary to understand which one you like. Operating different markets will form different trading thinking habits. Those who are accustomed to operating trends have a mindset of going with the trend, focusing on the end of the callback to make a trade, and are good at long-term trading. Those who are accustomed to operating fluctuations have a mindset of going against the trend, focusing on the opportunity to grab a rebound, and are good at short-term trading. Those who can be adept in both fluctuations and trends are veterans who have been honed by years of trading.
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