Do you know a system called the "Chaotianjiao Strategy"? This article shares that and some basic rules for executing intraday trades.
This is a relatively easy to understand trading system that combines moving averages and volume and price analysis.
This article mainly talks about đđ»
1. Volume and price analysis
2. The chili pepper tactics
3. The concept of swing trading
4. View, recognize and use pictures
5. Necessary Discipline for Day Trading
Lesson 1: Volume Price Analysis
1. Quantity-price relationship
1. Increase volume
(1) Rising: Active buying, incremental funds entering the market
(2) Decline - Active selling, not very healthy
However, if a single decline with large volume occurs in an upward trend, it is a sign of profit taking. In this case, the bulls may still be strong and there is a buying opportunity.
(3) Sideways: The bulls and bears are strong and in a stalemate, waiting for the winner.
2. Reduced volume
(1) Rising: Active selling decreases, holdings are the main
(2) Decline: Active buying decreases
(3) Sideways: Both buying and selling volume decrease, and the shore observation
If it is a constant, it usually means that the trend will continue (this is what @sjbtc9 said in the course he took at the time, but based on my current understanding of the market, the constants in most market conditions are not very meaningful to analyze, and it is more practical to pay more attention to the abnormal situations of increasing and decreasing volume)
3. The essence of volume and price analysis: further study the market by analyzing the attitudes of bulls and bears behind the market
2. Causes of abnormal trading volumeđ»
1. Increase volume
(1) The market is divided, and there are many disputes between the bullish and bearish parties.
(2) The main force intervenes and the dealer makes a unilateral bet on a single target
2. Reduced volume
(1) The market has reached a preliminary consensus
(2) The main force or the banker cannot deliberately create a reduction in volume, so it is generally believed that a reduction in volume is more real.
Lesson 2: The Chaotian Chili Tactics
1. Concept
1. Chaotianjiao Strategy: It means that after a long period of market price decline, the short-selling energy is effectively released, and the trading volume is shrinking. Suddenly one day, a medium-sized positive line with large volume appears. At this time, it can be considered that the main force has made a move and should keep an eye on the target.
2. On the K-line, it can also be shown as a large positive line breaking through the medium and short-term moving averages in one fell swoop
2. Possible timing
1. After a long period of sideways consolidation, it appears more often
2. The probability of appearing on the K-line of the box or triangle pattern is as high as 60%. The principle is that the price is the result of short-term and medium-term capital game. Once it is formed, the winning rate is also the highest.
3. Buying conditions
1. When the price is about to form a "chili pepper", buy when the K line is about to close.
2. After the "Chili Pepper" has formed, buy after the next day's pullback and support
(It should be noted that the above two methods have callbacks on the right side, and buying before closing is on the left side, so we need to combine some support signal indicators such as moving averages to use them. I will share the moving average system later)
3. The trading volume of the K-line must be doubled when buyingđș
4. Notesđ»
1. About support: The smaller the moving average distance, the more consistent the main cost is, and the higher the success rate is.
2. The trading volume must be enlarged, more than twice the previous K-line. The trading volume is the basis for direct judgment.
3. The smaller the callback space after the appearance of Chaotianjiao, the stronger the main force's willingness to go long. Generally, the retracement does not exceed half of the Yangxian real column.
4. Factors affecting the increase
(1) K-line pattern, moving average adhesion, and moving average combination
(2) Changes in trading volume
(3) Location
5. Factors affecting the increase
1. K-line pattern
(1) Length of the real positive column: In principle, the longer the positive column, the better the kinetic energy.
(2) If there is a shadow, it is best if the lower shadow is stronger than the upper shadow. If they appear at the same time, the shadow ratio cannot exceed one-third of the body of the K-line.
2. Changes in trading volume
(1) Whether the volume is doubled. If not, other indicators should be combined to judge
(2) In principle, the trading volume of the next day should not exceed that of the first day. Too large a volume can easily lead to the risk of capital flight. It is best to be slightly lower than the volume of Chaotianjiao or directly reduce the volume.
(3) If the volume is too large, you cannot buy directly. You need to observe several K lines and wait for confirmation before considering buying.
6. Stop loss mechanism
1. Set stop loss in percentage (for mid-term swing trading, the stop loss should be 5%-8%)
2. Set a stop loss at the position of Chaotianjiao (the volume falls below the half position of Chaotianjiao K-line)
3. Open low when there is a major negative impact, and exit the market directly
4. The correct logic of stop loss
(1) Stop loss is not a failure, it is turning passivity into initiative
(2) Take the initiative to control your short-term funds so as to seize a better opportunity
Lesson 3: Swing Trading
1. Trading philosophy
1. Choose a point in the trend where the profit-loss ratio and winning rate are large enough to break through and enter the market
2. Select the target and open a positionđ»
1. Varieties with obvious direction on the daily chart or long-term consolidation that will soon change direction
2. Look for pattern breakthroughs (convergence, triangle, channel) or trend line breakthroughs on the daily chart
3. Breakthrough near the resistance level with a small cycle of consolidation and continuous small Yinxian, Xiaoyangxian or Doji
4. Open a position when the critical point of the small cycle sideways consolidation is broken (5/15/60 minutes)
3. Stop Loss
1. The price fluctuations on the upper and lower edges of the small cycle before starting shall not exceed 10 times
2. Use the upper edge as stop loss for shorting and the lower edge for longing
3. If you have a light position, you can increase the stop loss appropriately
4. When the profit is 20-30 fluctuations, push the stop loss position to the opening point
4. Take Profitđ»
1. Reduce positions when encountering important moving averages (golden ratio)
2. Reduce positions when encountering previous highs or lows
3. After making a profit, the market forms a platform or breaks the trend line and lightens the position
4. When the profit-loss ratio is 2:1 or 3:1 or above, set the take profit to the opening point
5. Fund Management
1. Purpose
(1) Control losses, keep the trading curve upward, and maintain a good trading state
2. Understand the maximum loss you can bear under normal trading conditions
3. Maximum number of consecutive losses: 5 times
(1) Control the maximum loss of a single transaction = total funds * 30/5
Lesson 4: Viewing, recognizing, distinguishing and using pictures
1. Disk status đ»
1. The comparison of the number of Yin and Yang lines represents the overall trend
(1) In a healthy upward trend, the most obvious feature is that the number of positive lines is far greater than the number of negative lines.
(2) When the rise is large and the correction is small, the strategy should be to buy on dips
(3) The lows in an upward trend are excellent buying points, and the same is true in the opposite direction.
2. The length of the entity represents the internal kinetic energy and strength
(1) In a healthy upward trend, the most obvious feature is that the number of positive lines is far greater than the number of negative lines.
(2) When the rise is large and the correction is small, the strategy should be to buy on dips
(3) The lows in an upward trend are excellent buying points, and the same is true in the opposite direction.
2. The length of the entity represents the internal kinetic energy and strength
(1) If there are continuous small positive lines, there will be a big positive line. When the real body of the positive line starts to get longer and longer, it means that the upward momentum is increasing.
(2) Continuous small positive lines in the bottom area or during the rise are good intervention signals.
(3) If there are continuous small Yins at the top, there will be a big Yin
3. The length of the shadow represents the intention of turning.
(1) The longer the upper shadow, the heavier the selling pressure, which is less favorable for prices to continue to rise, and therefore the stronger the significance of a downward turn.
(2) The longer the lower shadow, the more buying orders there are, which is less favorable for a decline, and therefore the greater the significance of stopping the decline.
(3) The K-line entity does not change much, and the upper and lower shadows are getting longer and longer, indicating that the battle between longs and shorts is becoming more intense. At this time, waiting and watching would be a better strategy, waiting for the direction to be chosen.
2. The core of image recognition and image use
1. Key Directional K-line
(1) Obvious support level, resistance level, absolute high and low level, relative high level, absolute high and low level,
2. The significance of warning K-line
(1) Hammer pattern (If you donât understand, I @sjbtc9 will share it later)
3. Time windows for intraday and swing trading
1. Attack for 3 minutes, determine for 15 minutes, and direction for 60 minutes
2. MACD is used to determine the position of potential energy and to make yin-yang conversions.
Lesson 5: Some disciplines of intraday trading and the 6 factors that constitute pressure support
1. Some Disciplinesđ»
1. If the capital loss is 2% within a day, donât do it today
2. Itâs too late to do it
3. Donât do anything that makes you emotional
4. If the timing and rhythm are not right, choose to wait and see
5. Never leave orders overnight, especially losing orders.
6. No more than 4 operations per day, and the loss cannot exceed 2%
2. 6 factors that constitute the pressure support lineđ»
1. The lowest point of the reaction is support, and the highest point of the reaction is resistance
2. Support represents concentrated demand, while resistance represents concentrated supply
3. In an uptrend, resistance represents a pause in the upward trend and is usually broken (the same applies in the reverse direction)
4. In an upward trend, each support level must exceed the previous support level (the same applies in the reverse direction)
5. When an upward trend fails to break through the previous resistance level or a downward trend fails to break through the previous support level, it is the first signal of a trend reversal;
6. When an upward trend breaks through the support level or a downward trend breaks through the resistance level, it is the second signal of trend reversal.
3. Market Status
1. Rapid rise corresponds to slow fall
2. Slow rise versus emergency fall
3. A sharp drop corresponds to a slow rise
4. Slow down and respond to the rise
Final note: The views in this article are for reference only. Friends who read this can copy it. However, from my perspective, this system is not very supportive of high-frequency style friends, especially the conditions for the appearance of "æ怩æ€".
This system does not require much pre-requisite knowledge, but you can wait for my later updates on the application of moving averages and special K-lines.
Thank you for your attention~