How can foreign exchange trading stop chasing up and selling down?

Chasing up and selling down is the investment habit of ordinary foreign exchange investors. When you see a price rise, you can't help but follow the trend and buy. After it falls, you think you have misjudged and lost money. In a one-sided market, although chasing up and selling down can be profitable, you need to accurately judge the general trend. If you take the last shot in the rising process, or throw it at the moment before the bottom reverses, or in a volatile trend, chasing up and killing down may cause heavy losses to investors.

Since September 5, 2007, the EUR/USD has been on a continuous upward trend. The daily closing price is higher than the opening price, and it has been rising in a step-by-step manner. Under such a good momentum, I, who have always been stable, began to lose my temper. On September 10, when the exchange rate rose above the price of 1.3800, my "chase" mood could not help but rise, so I bought a lot of EUR/USD at the higher price of 1.3808 on the day, ready to make a mid-line investment. The exchange rate continued to rise after self-buying, but not by much, and then maintained a high fluctuation and closed near my entry price on the day. Although I was a little worried at the time, I felt that since I wanted to hold in the middle line and adopt the strategy of "long-term fishing for big fish", it was reasonable to make a profit for a while, so I relaxed and waited. As I expected, after the opening of the market on September 11, the exchange rate continued to rise, and soon exceeded the highest price on September 10 at 1.3812.

At this time, one of my friends who is an expert foreign exchange speculator just called me, so it was natural to talk about what currency pairs I have been buying and selling recently, what kind of operation I have taken, and how I have made profits recently. When talking about the current trade, I said to him proudly, "People in the market say that they should try to avoid the operation of chasing up and killing down, so as not to outweigh the gains. But I think this method is quite good. Yesterday I just chased up the EUR/USD, and it seems to be doing well so far." After listening to my remarks, he said: "There are many investors in the market who talk about'chasing up and killing down '. This is not without reason, because most of these people have lost here. In fact, this is not to say that this method of operation is completely unfeasible, everything is within limits, and if it is too late, it is not enough. As long as you can well grasp the timing of chasing up and selling down, profitability is not a problem. Chasing up and selling down is more suitable for unilateral markets. In the early stage of a bull market, chasing up and selling down, and in the early stage of a bear market, once you encounter a volatile market, it is easy to be slapped back and forth by'left slap, right slap ', and eventually become a victim in a volatile market. "

"Then is my operation okay this time?" I asked impatiently. "Although your operation has a bit of a mishap feeling, it is still very much in line with the law of chasing up in the early stage of a bull market. Fundamentally, the euro still maintains a good pattern, while the economic outlook of the dollar is not optimistic due to the impact of the subprime mortgage crisis, so I think the euro/dollar will have a long-term rise after the previous adjustment. It can be said that you are chasing up at this time is just right. But I want to remind you that you can't chase up blindly in the future."

After that, the foreign exchange market did as we had predicted before, and the EUR/USD began to soar. Although the exchange rate was slightly lower on September 13 and September 14, it was still above my entry price. On September 20, the EUR/USD rose above the price of 1.4000 and continued to show upward momentum. On September 28, the exchange rate reached a high of 1.4276, almost 500 points above my purchase price. But since then, the market has not seemed so stable. On October 1, the closing price was significantly lower than the opening price of the day. On October 2, the exchange rate fell again. Seeing this situation, I immediately took a position squaring against EUR/USD, when the exchange rate was 1.4165, and finally I made a profit of 360 points.

I wanted to go out and find an opportunity to sell the pair, but my friend stopped me from doing so, believing that the market would not reverse as I thought, and that the EUR/USD would still rise after a short-term correction. Fortunately, I followed my friend's advice and did not carry out the sell operation, otherwise I would have lost something, because the exchange rate began to rise again soon after.

After the operation, I made a simple summary analysis. Although the reason for the success of this foreign exchange transaction is mainly the help and affirmation of friends, I also understand that chasing up and selling down is not a taboo for investors. As long as you correctly judge the general trend and the situation of the market, do not blindly "chase up" when you see good news, and "kill down" when you hear bad news, there will be no "chase up" at the top of the mountain and "kill down" at the bottom. As long as you chase up and kill down properly, you can eventually get a lot of profits.