DBG Academy takes you to the right way to open short-term band trading

day tradingIt refers to buying and selling transactions in a relatively short period of time in pursuit of quick profits.day tradingInvestors usually hold positions for a short period of time, usually a few minutes to a few days. They mainly focus on short-term fluctuations and trends in the market and try to profit from these fluctuations.

day tradingThe goal is to make a small profit in a short period of time. Traders may make multiple trades to accumulate profits. They usually set stop loss levels to control risk and set profit targets to exit the trade when a certain profit is reached.

day tradingTraders typically use a variety of technical analysis tools and indicators to analyze the market and develop trading strategies based on market trends and fluctuations. They may use technical indicators such as chart patterns, moving averages, relative strength indicators, etc. to identify market turning points and opportunities. They typically focus more on short-term price movements and volume than on long-term fundamentals.

day tradingTraders need to have the ability to make quick decisions and execute, as well as the ability to observe the market keenly and accurately predict. This type of trading is risky and requires traders to have extensive experience and skills.

      There are many people who have come into contact with investors, and they have found such a phenomenon. Many people are particularly fond of short-term operations, the shorter the better, and they enjoy it every day. Although there are also experts, most of the trading stars we see are in the medium and long term.

Therefore, the theory that short-term talent is required and it is difficult to become a talent is rampant, but most of them are blind and conceited, "day tradingThis method itself is fine, it's a problem of his ability if he doesn't do it well, it doesn't mean I can't do it well. "Therefore, there are still many people who are still clinging to the short-term. Of course, traders like this situation, and the exchange is grateful to them for providing a lot of liquidity, but for these short-term customers, is it right to be so persistent?

I've talked to a lot of people who like to do short-term projects, and I've analyzed two reasons why they insist on short-term projects:

One is:If the capital scale is large, even if the long-term return is not high, the absolute return is also very objective, but the short-term customers generally have a small capital scale, and the absolute return corresponding to the long-term return is too low. They expect higher returns, so they need more operations. It is best to eat every stage of the smooth market.

For example, there would occasionally be a dozen or so consecutive male lines on the K-line during the day, which looked very tempting. This opportunity was not to be missed. If this effect could be achieved, it would not be a problem to double it 10 times a year.

The second is:day tradingHigh efficiency, whether it is to make money or lose money, you can quickly give a result, unlike long-term, holding a position for several weeks, the capital fluctuates up and down, when you lose money, you look forward to returning the money, when you make a profit, you worry about the withdrawal, you feel uneasy, and you can't sleep well, which is really uncomfortable. Short-term is different, and you will get results soon, so you don't have to worry so much about it. This is physiologically in line with the needs of the human brain to meet immediately.

Both of these reasons sound reasonable, but upon closer inspection, they are not.

The first reason,He only saw the smooth market he wanted to see, but when he really started to do it, he often encountered those unsmooth market conditions, which caused great losses.

There is a story about a man who lost his ring while walking at night, and then went back to look for it. As a result, the person next to him found that he was only looking under the street lamp and asked him, "Why are you only looking under the lamp?" He said, "How can I find it where there is no light?" The person simply forgot his true purpose, which was the ring, not the act of "looking".

A person who is obsessed with doing short-term business during the day only wants to participate in the smooth market, but in fact, the smooth market is like a street lamp on the road. The range of illumination is very small, and most areas are still black. To find a ring, you must look for it from the whole road, not just under the lamp.

Analysis of the second reasonLet's take a look at an experiment on delayed gratification. This is an experiment conducted by developmental psychologists. The experimenter gathered some children and distributed them some candies, and then told them: If you eat it now, you can only eat one, and if you eat it 20 minutes later, you can eat two candies. Some children couldn't resist the temptation and chose to eat the candy when they got it; while others were able to resist the temptation and ate two candies. In subsequent follow-up surveys, the experimenters found that children who could resist the temptation and ate two candies tended to have better academic performance and were more likely to succeed in their careers or jobs.

One can imagine how unbearable it is for a child to hold a sweet candy but not put it in his mouth, just like we bear the pain of holding a position. But what we want must be two candies, not just one.

The above two examples illustrate how we should pressday tradingThere is no direct operational guidance, but at least it tells us the wrong motivation for short-term efforts and the correct direction of effort. How should it be implemented in practice? Let's analyze it below:

Let the number of operations per unit time be n, each operation corresponds to one entry and exit, and the time is t, then the total number of operations = n * t, and the winning rate P = the number of profits/the total number of operations; let the average amount of each loss be R, and the profit-loss ratio is B = the average amount of each profit/the average amount of each loss, then the average amount of each profit = R * B; assuming unlimited funds and 0 handling fees, then the total profit within a certain period of time = profit-loss = average amount of each profit * number of profits - average amount of each loss * number of losses = R * B * n * t * P-R * n * t * (1-P) = R * n * t * [ (B + 1) * P-1].

Many friends have asked me that I can't see the explanation of position allocation and the effect of leverage in the formula. They are wrong. In fact, by analyzing the R in the formula, we can know the weight of our positions and the size of leverage.

When you open a full position, the average loss R will become larger each time. When your leverage is particularly large, even if there is only a small absolute distance between the stop loss point and your open position, but it is magnified by the leverage many times, R will also become larger. Therefore, by analyzing the relationship between each number, we can determine which variable in the formula people who do high-frequency, short-term, medium-term and long-term make money.

For example, people who are high-frequency have a lot of operations per unit time, that is, the n in the formula is very large. They cut in by analyzing K-lines, tick charts or quotations that do not exceed 1 minute to determine the direction of a small price jump. If the direction is right, the price will jump out immediately after a few points, and if the direction is wrong, they can't wait to jump out, so the corresponding profit and loss ratio B is very small. But the accuracy rate is very high, that is, the winning rate P is very high.

Obviously, this model earns money for the winning rate P and the number of operations n, which is to maintain a high winning rate on the one hand, and on the other hand, open as many positions as possible in unit time. The size of the winning rate, in a short period of time, is actually inversely proportional to the holding time, because in a certain price space, when there is already a profit, the longer the holding time, the greater the possibility of the price changing in the direction of loss.

In most cases, a high winning rate corresponds to a short position, and if a short position is to make money, it is necessary to operate it frequently.

As for long-term people, their number of operations per unit time is very small, and they may operate less than 10 times a year, and the corresponding n in the formula is very small. They rely on the shape of the weekly K-line, the monthly K-line, and even the annual K-line, plus the analysis of the macroeconomic situation, to judge the long-term trend direction. The change of the long-term direction corresponds to a large price change, and the corresponding stop loss of this pattern is very large, so they will not take heavy positions at first, but will only test the direction of light positions. If the direction is correct, they will continue to increase the position.

As the market continues to develop, the average cost of their positions will slowly move up. If they fail to get out of a big market, there is a high probability that they will lose money or lose money if they earn very little. Their winning rate is not high. But once they get out of a big market, they can have time and space to increase their positions to a very heavy position, and naturally they can achieve a super large profit-loss ratio. Therefore, this model earns money on the profit-loss ratio, which means that they need to be able to hold the position when they are doing it right. When starting a float or adding a float, don't rush to leave the market. It is very taboo to operate frequently.

We have analyzed the two extremes of one short and one long. The middle one is the same, but it is not so extreme. People who do short-term bands also do not have the advantage of profit and loss ratio, and people who do mid-term trends also do not have the advantage of winning rate and operation times.

Therefore, if you like to do short-term bands, don't think about super large profit and loss ratios, and find ways to improve your win rate and operating frequency is the first priority; if you prefer to do medium and long-term trends, don't be afraid to open positions with floating losses or even stop losses, because if you do the right profit once, you can cover the wrong losses 10 times.

No matter whether it is a short-term band or a long-term trend, there must be a corresponding and rigorous operating system, and it is absolutely impossible to have a high win rate and a high profit-loss ratio.DBG ForexIt is pointed out that junior investors often make this mistake, always trying to have both, but it is counterproductive. In operation, it will only be confused and confused, and the market will turn around.

The above analysis is very rational and has no emotional factors. Friends who like to do short-term bands emotionally, have you found any problems? Although you have done frequent operations, the core direction you have to work hard is to improve the winning rate! And the improvement of the winning rate depends heavily on the smoothness of the trend, and the smoothness of the trend is basically proportional to the size of the time level. The larger the level, the smoother it is. Just look at the difference between the minute chart and the weekly and monthly charts. For short-term bands, basically the time level of the K-line chart is very small, and most of the time, the market is not so smooth. It is too difficult to improve the winning rate in an unsmooth market.

DBG Forex shows that the correct way to open the short-term band is to first clarify the most suitable time level, and it should be based on the specific target, according to its historical trend and recent, to see what level it is most suitable for operation. On the one hand, filter out the unsmooth market, on the other hand, you can not miss the opportunity of the band, and then try to improve the profit and loss ratio on this basis. Not all targets have a unified time level to do short-term bands.

A good trading system should try to avoid the risk of excessive losses due to inappropriate level selection, while ensuring high operating efficiency and better balancing the relationship between profit and loss ratio, win rate, and number of operations.