Three Trend Trading Methods For Stock Market Entry

[foreword] for investors, trend trading is undoubtedly the mainstream of technical analysis. In a rising trend, if you choose to be long, the chances of being right are high, but the probability of failure is very low. This is the core idea of trend trading. Of course, many details can be adapted from the development of real technology trends. Among them, entering the warehouse is the key step. Here, introduce several common admission modes.

　　 Breakthrough admission -- the most mainstream admission mode

　　 Breakthrough deal It is almost regarded as a model of trend trading. This kind of trading model is the most popular admission mode among trend traders at present when the price of investment products breaks through the important resistance level and begins a significant trend.

The figure is a very standard box after finishing the schematic diagram of the breakthrough. And point B, that is, when the price breaks through the previous consolidation range on track, is the entrance point that most breakthrough traders will choose.

Breakthrough trading is undoubtedly a typical trend trading. Because before point B, the market is always in the trend free period of up and down shocks, which is the period that trend traders hate most and is not suitable for trading. Only when the early interval is broken, can we believe that the market begins to have a trend, and this is the time for trend traders to enter. For the trend traders who enter at the breakout of point B, a typical stop loss setting position is at the down track of the early volatility range, that is, when the trend changes to a downward breakthrough, they leave the market. Of course, this is a very conservative setting method, and some investors will adopt time stop loss. That is, when point B appears in the market, there should be a process of rapid rise in order to stay away from the earlier shock area. This is the real breakthrough trend. Otherwise, it may be a false breakthrough and it is time to leave the market.

As far as the actual transaction level is concerned, the most important thing is that the operation is simple and the execution is easy. If this is indeed a key price breakthrough, then the future price should be quickly away from the breakthrough, which requires investors to be able to enter as soon as possible, so as to reduce the cost of holding positions. At present, stop loss orders are supported in the mainstream international investment markets. Take the attached figure as an example. Investors can set the case that when the stock price breaks through a certain price, they can buy long at the market price so as to realize the follow-up. The large-scale computers of securities companies are more reliable than the fixed price of individual investors, which can greatly optimize the execution efficiency. Unfortunately, at present, stop loss orders are not supported in A-shares, only traditional limit orders. Although some commission software can simulate this process, there is still a difference between software simulation and direct support by securities companies. This may be an important reason why breakthrough trading is far less common in A-share markets than in other international markets.

However, even with the stop loss orders of securities companies, the admission cost of breakthrough admission is often not ideal in those fast fluctuating breakouts, and there is often a huge sliding point (the price difference between the expected admission and the actual admission), especially when the position is large, when the liquidity is insufficient, the sliding point will even increase, thus increasing the cost and weakening the cost Profit margin.   {page_ break}

　 Admission before breakthrough

It's because the breakout deal is in Execution price There will be some deficiencies, so some traders will choose to take the first step, do not have to wait for a breakthrough, but enter when the market approaches the breakthrough point, that is, point a in the figure.

This kind of trading idea is undoubtedly of great benefit in optimizing price execution. Since the market has not yet broken through, point a itself is lower than point B. moreover, the price fluctuation is limited. At this time, investors do not need to use the stop loss order to track the trend, or even use the limit order to obtain a better market entry price. Large positions can also be dispersed and gradually entered the market, dispersing the impact on the market. At this time, many volatility traders choose to reverse the resistance position A) provides a large number of breakouts for short sellers.

Of course, the choice of admission before the breakthrough, we have to face a major problem: predict the trend. When approaching the breakout level, is this another wave of volatile range trading, or a new upward breakthrough opportunity? This requires investors to have a prediction. Therefore, the traders who choose to enter before the breakthrough will use some technical analysis to assist in the research and judgment. For example, under the general pattern, it is required to follow the trend. For example, if the consolidation after a period of rising market is consolidated, it is likely to become a relay market. This means that the normal market in the future should be a breakthrough upward. At this time, you choose to enter before the breakthrough, and the winning rate is relatively high; Another example is to look for the rising relay pattern again under the micro pattern. Sometimes the market will choose to integrate in a narrower range before breaking through the position, which is often a good precursor for a breakthrough upward. Moreover, due to the narrower consolidation, we can set a relatively small stop loss position to capture the potential large breakthrough market, which is cost-effective.

　 It doesn't happen every time you enter

Although a large number of technical breakthroughs can not be achieved before entering the market from time to time, there are also a lot of false breakthroughs that can not be achieved by excellent investors. In the second place, when entering the competition, some people will turn back to the trend of turning back.

Point C is similar to point A. since there is a callback at this time and there are many selling orders, the price limit sheet can obtain a relatively good market entry price, and large orders can be scattered into the market in batches. The biggest advantage of C-point entry is that the market has proved that this is a wave of breakthrough, investors do not need to speculate whether it is a shock or a breakthrough, so as to avoid possible failure.

Of course, there are also problems with the withdrawal admission of point C. The first problem is that not all breakouts have pullback, especially for short-term breakouts, which tend to replace pullback with big rises, which makes investors lose a lot of trading opportunities. However, it is extremely common to draw back in the medium and long term. The second problem is that although a breakthrough has been confirmed in point C, if the range of breakthrough is limited, there is still the possibility that it will turn into the failure of B-shaped reversal breakthrough and the stock price will return to the previous volatility range again.

　　 investment It's an art. The three admission modes mentioned above have their own advantages and disadvantages, but they are not the best. The key is whether traders can choose the most suitable mode for themselves and combine with their own trading system to achieve the best effect.