Personally, I believe that the sustained strength of the market is determined by the sustained strength of people's emotions. Most people believe that the daily market trend has something to do with the fundamental data (the media is not talking about why the market rose yesterday, why it fell today, and what will happen tomorrow based on the fundamental news and data every day? Most of these analysis and research are not helpful to the trade, but harmful on the contrary, because most of them are wrong); However, I believe that the daily market trend is directly related to the imagination (subjective emotion) generated by people's interpretation of fundamental data.
The persistence of emotions, or the fluctuation range of emotions, always starts in the form of small level fluctuations (small optimistic or pessimistic start) and continues to large level fluctuations (emotional development and herd effect). However, not every small level emotion fluctuation will continue to a large level emotion fluctuation. A larger market trend driven by emotional fluctuations that cannot be extended from a certain level to a larger level, we often call it horizontal, consolidation, central or consolidation market; A market trend driven by emotional fluctuations that can extend from a certain level to a greater level is often called unilateral market.
In a word, we are trying to solve a problem in our trading or study -- Confirm where the market really reversed! If we solve this problem, we can easily make profits. Making money is the real purpose of our transaction! Not others, such as proving that they are smarter than others, while most people do such things in the market. Funny, regrettable and pathetic!
To confirm the reversal of the market, we must first determine the operation level. The idea behind the confirmation of the operation level is to understand that the operation level is the market level, the market level is the emotional level, and the change of the emotional level is the aforementioned form -- 1 , run in a small level; two , from small level to large level.
The small or large level mentioned here can only be a relative concept, not an absolute concept. In this way, it is because the small or large scale is ultimately measured by the speed of people's psychological reaction. People with fast mental reaction will regard the small level that those with slow mental reaction think changes quickly as the larger level that changes slowly. For example, some people should five The minute level operation does not feel any pressure too fast psychologically, but some people cope with it thirty The minute level operation is very fast. They should do daily level, even weekly level, so that they will have enough time to see the changes in the market. This is because, on the one hand, the speed of psychological reaction is originally slow; The second reason is that they have not been properly trained. After proper training, the speed of psychological reaction will be improved to a certain extent.
Thus, there is such a common view or judgment -- The small level market trend is unreliable, and the large level market trend is reliable. Such a view or judgment is absurd. The reason is that the objectivity of the market evolution is judged by the individuality (subjectivity) of the speed of people's psychological reaction. for instance, five Minute level, if the market cannot continue to develop, then the market changes 30-50 There are changes between points. For daily level people, there is no trend at all five The minute level market trend is unreliable.
We can never predict where the turning point of the market will begin! However, it is clear that any reversal of the market starts from the smallest level -- The minimum level we can see now may be one Second level. For people with quick psychological reaction, relatively small level operations can be used, such as five Minute level fifteen Minute level or thirty Minute level. (Note: This is just an example, not the smaller level is these levels. The so-called size, everyone has their own positioning.) If the market is only in a 30-50 At least you won't have big losses and there is a possibility of making profits. Once it becomes a big market 100-300 You will have great psychological advantages and considerable profit accumulation in a single point or larger market. This is the idea behind "looking at the long term from the short term", that is, rational operation. It never makes analysis and prediction but looks forward to the big market of hundreds or thousands of points. Instead, it starts from the small (things) according to the rules, works hard, and moves forward step by step.
For most people at relatively small levels, there seems to be no trend change. The key here is not to "look with your eyes"! It is subjective to look with eyes, because it varies from person to person. You look like there is a change in trend. He doesn't look at all. This is why I advocate using the "rule trading method" to operate! Use rules to confirm the changes and turns of the market.
Once you understand how to use rules to confirm the changes and turns of the market, and then choose an operation level and trading system suitable for your own psychology according to your own psychological reaction speed, you can easily confirm the reversal of the market, and it will be easier to make money.
Original text: http://blog.sina.com.cn/s/blog_a3abd47401013ymm.html