How do I see the market price movement? In fact, they are a wave in my eyes.
Fluctuation is the manifestation of market price movement.
Waves have peaks and troughs, and there is a time difference between the adjacent peaks and troughs.
The vertical distance from peak to trough is a spatial dimension, which is called fluctuation amplitude.
The horizontal distance from peak to trough is a time dimension, which is called time span.
Amplitude divided by span can be roughly regarded as volatility.
Obviously, the larger the range, the smaller the span, the higher the volatility, and vice versa.
Let’s start with a point of view: there are cycles first, and then there are trends.
The definition of trend is inseparable from the definition of market cycle and operation cycle.
Therefore, among the above three parameters (amplitude, span and volatility), I think span should be a specific and quantifiable thing. Generally, I prefer monthly and quarterly.
Well, after the time parameter is fixed, we will focus on the other two. We extend two indicators
Market persistence
Market volatility
The so-called persistence refers to the absolute value of price change from the beginning to the end of a specified cycle.
The greater the absolute value is, the greater the amplitude is, and the greater the fluctuation is – the greater the trend is.
This leads to a question: what is big and what is small?
Big and small are relative. Relative to what—— Let’s sell it here. I’ll talk to you later.
The so-called volatility mainly refers to the smoothness / roughness of the market. Is it a three-step process? Or crisp?
Standard deviation or ATR can be used. Of course, it can also be seen at a glance with the naked eye.
We build a cross coordinate system based on sustainability and volatility.
Market conditions can be divided into the following four types:
Good persistence, high volatility – smooth trend.
Good persistence, low volatility – bumpy trend.
Poor persistence, low volatility – narrow consolidation.
Poor persistence, high volatility – wide range shock.
It is self-evident that we can only judge which state the current market is in by investigating the past period (January or the first quarter). However, we can not predict which state the market will enter next.
If we can have this kind of technology, we can be supernatural – we can develop four kinds of strategies, which are good at dealing with four different kinds of market, and then we can come to cover up the situation.
However, this is not possible.
It can only be said roughly that the end of the trend is the shock, and the shock is enough for the trend.
But, what is finished, how to know is enough?
Most of the time, you think the trend is over, but it comes back! You think the shock is enough, but it’s a long way off.
The market is coming out, not seeing it.
To grasp the direction, we still have to guess, try and make mistakes. We can’t do it without paying the price.
Well, even if you can’t be supernatural by prediction, the above quartering method is not useless.
Let’s think about it. The market is changeable. In the final analysis, it’s nothing more than that.
If we develop a strategy and hope that it will be universal and can be used in multiple periods and varieties, we must consider it from this perspective – how will the strategy perform in the above four markets?
Here, it is suggested that novice trading friends can refer to the previous “four types of trend system”.
Four types, for example, are like four seasons. The vegetables and fruits we eat all have their own seasons.
As human beings, we should figure out what fruits we like to eat and in which season the fruits will come out.
Then this season is our peak season – if someone likes to eat Chinese cabbage, then winter is his peak season.
That is to say, although shock is disgusted by me, if someone has a super advanced shock system, the above 3 / 4 market type may be his peak season.
No one can eat big or small! No trading strategy can adapt to all market fluctuations!
There are always some seasons that belong to you, and there are always some seasons that don’t belong to you!
Not all fluctuations can be turned into profits.
Don’t try to catch all the fluctuations.
Novice often make a mistake, is to see a short period of large fluctuations, regret: Why did not catch it!
Let’s not talk about heavy storage or whether we can catch it. Let’s just say: should we catch it?
We need to think it over.
Fluctuations, they all look the same. But some are knives, some are gold.
The details of which are knives and which are gold vary from person to person.
What we need to do is not turn a knife into gold. We don’t need to have that kind of special function.