Briefly introduce a one-minute swing trading method, which is derived from the Chaos Theory
Core profit concept: make big profits and lose small losses
This includes two aspects:
1. The profit margin is greater than the stop loss margin
First of all, to achieve this goal without considering the winning rate, we need to rely on the pattern to pick the bottom. So how do we pick this bottom?
Everyone knows the concept of the formation in Chan, so they naturally understand that in a falling state, if there is a reversal and an upward move, there must be a bottom formation. The appearance of a bottom formation does not necessarily mean that there will be an upward move.
By taking advantage of this, as long as you open a position at the bottom of the pattern, stop loss when it falls below the lowest point, and close the position at the end of an increase, you can achieve the goal of making big profits and small losses.
If we only rely on formations to open positions, then the problem arises:
When bottom hunting, continuous stop losses lead to a particularly low win rate, which causes the profit from a successful upward trade to not cover the losses from failed bottom hunting.
To solve this problem,
1: Reduce the space of each stop loss.
To achieve this, one must open positions at a small level, leading to larger ones.
If we want to catch the bottom at the 5-minute level, expecting a 5-minute upward move, we do not open positions at the 5-minute bottom formation, but switch to the 1-minute level to open positions. This way, each time I fail, the stop loss is not one or two 5-minute candles, but one or two 1-minute candles. After this improvement, the stop loss range is greatly reduced with each failed position.
2: Reduce the position size during each stop loss.
To achieve this, one should open half a position when a bottom formation appears at the 1-minute level, and wait until the 1-minute pullback does not break the low of the formation to open another half position. At the same time, move the stop loss up to the second low of the 1-minute pullback that does not break the low.
After such optimization, there are three situations:
1: After the first half position opening fails, it is only a half position stop loss, not a full position stop loss.
2: After the second half position opening fails, even though it is a full position stop loss, the stop loss space has not changed.
3: After a second half position opening fails with a stop loss, if the price does not break the low of the bottom formation, buy back with a full position again, setting the stop loss at the second low.
After such optimization: when a position fails, most of the time it is a half position stop loss, and a small part is a full position stop loss, but the stop loss space has not changed or even has become smaller.
When a position opens successfully, most of the time it is a full position, theoretically, there are also rare cases without adding positions, which are very few and almost never encountered.
After these two steps of optimization, two goals have been achieved:
1: The key to stop loss is whether the loss space is small and the profit space is large, depending on when to close the position.
2: Large position when profitable, small position when stop loss.
Although these two goals have been achieved, the win rate has not improved, and losses still occur. So how to improve the win rate?
1: Trend-following, how to achieve trend-following?
To achieve trend-following, one must combine small and large cycles. The direction of the 30-minute trade determines the direction of opening positions at the 1-minute level. When confirming that the 30-minute direction is upward, open a position when a bottom formation appears during a pullback at the 1-minute level.
The direction of the 30-minute trade relies on the 30-minute top and bottom formations. When a bottom formation appears in 30 minutes, there may be an upward move in 30 minutes. At this time, wait for a bottom formation to appear at the 1-minute level before opening a position. Stick to it until a top formation appears in 30 minutes.
2: After combining small and large cycles, it was found that the win rate is still not good and does not achieve profit. However, so far, this method has only used formations as a technical structure.
So next, to improve the win rate, it is necessary to use the 3 buying and selling points of entanglement:
1: Near the buying point entangled at the 30-minute level, only when a bottom formation appears, is there an expectation of a 30-minute upward move. At this time, go to the 1-minute level to look for a buying point that reverses the 30-minute trend. Stick to it until a top formation appears near the 30-minute selling point, then change the direction of operation. In the intermediate stage, when a top formation appears at the 30-minute level, it is unnecessary to pay attention; continue to go long in the original direction. Based on experience, when the first and second tops appear in 30 minutes without reaching the 30-minute selling point, it is actually the best position for a 1-minute buying point.
2: Similarly, at the 1-minute level, what we need to do is wait for a bottom formation to open a position at the buying point during the 1-minute level's pullback.
When opening a position at the 1-minute level, the following situations may occur:
Buy at the 1-minute level when there is a consolidation divergence.
Buy at the 1-minute level when there is a trend divergence.
Buy at the 1-minute level when there is a segment divergence.
At the 1-minute level, if the consolidation does not diverge, one buy at the sub-level (may turn small to large).
At the 1-minute level, if the segment does not diverge, one buy at the sub-level (may turn small to large).
Buy at the 1-minute level when the trend does not diverge at the sub-level (may turn small to large).
The 1-minute level has not formed a segment structure, but a segment has already formed at the 5-minute level, at the first top formation of the 30-minute level, one buy.
Next, let's talk about taking profit. If taking profit is not done well, one cannot profit.
The method of taking profit is to give up the divergence segment at the 1-minute level, mainly because of the fear of small turning into large, causing most profits to be given back.
1: After opening a position, as long as a violent rise at the 1-minute level occurs, regardless of whether there is structure at the 1-minute level, take profit directly. Because after the violent rise, the profit is enough, and the risk-reward ratio has been established, it is unnecessary to risk waiting for a divergence structure.
2: After a 1-minute upward move occurs and profits are made, the stop loss position remains unchanged.
3: When a segment divergence appears at the 1-minute level, move the stop loss to the cost line and level it out.
4: A central divergence appears at the 1-minute level, take profit.
5: A central level not diverging at the 1-minute level, after a violent rise occurs at the central level, take profit.
The method seems very simple, but the difficulty lies in execution.
Since it is a method of bottom hunting relying on divergence and formations, the initial win rate is not high, with six stop losses out of ten trades being very common (as experience increases, the win rate will gradually improve). A method with a low win rate is very difficult to execute. After each loss, can one execute decisively again when a signal appears?
After experiencing several failed position increases, can one decisively increase the position again when a signal appears?
Every time after a winning upward move, the stop loss is hit again. After each segment divergence, it is leveled again. Can one still firmly hold the position until a segment at the 1-minute level?
In execution, failing to consistently execute signals and always adding positions results in the final outcome of trading not being profitable. It will only balance out in gains and losses.
The hardest part here is the stop loss. Every time the continuous signal fails, every time after increasing the position, the stop loss is hit, every time after profit, the stop loss is hit again, every time after profit is leveled, can one still persist and decisively strike again when the signal appears?
Without stop loss, there will be no profit; if you are reluctant, you will not gain.
These days I am preparing the divine order for layout that is about to start!!!
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