Hello everyone, I am Xingzhou, welcome to my trading insights channel. These two days, I can say that I have been holding orders for a week, from a position of around 54,300 to now. I have some small insights to share with you.
Let me explain first, I personally do not advocate the operation of carrying orders. I have always believed that a complete stop-profit and stop-loss strategy is a healthy trading plan. This time I carried the order because I saw too many friends being trapped, and I am not very good at this aspect, which resulted in me not knowing where to start every time my friends asked me.
This time I also made up for my shortcomings and verified the ideas in my mind. Without further ado, I will talk about my operations in this week and my thoughts so far.
Holding a position is a bad situation caused by being forced or irrational. I personally think this is an unhealthy and incorrect trading strategy.
Why do I hold the order? In my opinion, there are two reasons.
First, before entering the market, there is no complete trading plan and no clear stop-profit and stop-loss.
Second, I have already made a trading plan, but was disturbed by other external factors and forgot to bring it with me.
A comprehensive trading plan before entering the market
In a trading plan, I personally think the following points are necessary
1. Entry position and entry form
From my personal trading system, the key position is one of the essential key factors. I will never trade if the market is not near the key position. To put it simply, I will not watch it during garbage time.
K-line pattern, when considering entering the market, is there a reversal golden K at present, such as engulfing pattern, inverted line, hammer line, evening star, morning star, piercing pattern
Similarly, when preparing to enter the market, observe whether the current volume deviates from the price or has abnormal conditions, such as shrinking volume and rising prices, abnormal daily volume, etc.
Increase certainty and use tools to observe the importance of entry positions, such as whether the moving average is at the entry position, whether the important Fibonacci sequence is at the entry position, whether the Vegas channel is at the entry position, and whether the Kentner is at the entry position.
2. Stop profit position, why stop profit at that place
In my opinion, the take-profit position is based on the key position. For example, if the entry is a short position, the take-profit position is usually placed at the next support level.
The key position can be found with the help of tools, such as the Fibonacci key number series 0.382, 0.5, 0.618, the EMA moving average system, the middle and lower tracks of Keltner, and the next channel of Vegas.
You can also search for it yourself in the market and observe that in the historical trend, there are multiple turning point tests in a certain area, that is, it is more effective to serve as support and resistance.
3. Stop loss position, why stop loss is set at that place
Similarly, my personal stop loss is also based on the key position. Taking short selling as an example, my stop loss is generally placed above the resistance level.
K-line entry stop loss, this is generally a method of planning entry when there is a reversal of the golden K, set the highest point of the upper shadow as the stop loss, generally give a point. For example, the highest point is 65400, then I personally will be accustomed to an extra one or two hundred points 65600 as my stop loss position to prevent liquidity plunder.
Fixed stop loss is usually set according to a fixed loss ratio. For example, large-cap stocks like BTC and ETH have a 2% stop loss, and those copycats like People and TON have a 5% stop loss. It can also be used in combination with key positions and K-lines, which will have unexpected effects.
Tips: Before entering the market, it is best to use tools to measure the profit and loss ratio. My personal habit is that if it is less than 1.5, I will not consider entering the market to make a trade. 1:2 or more is better.
Tips: The profit and loss ratio is measured based on the entry position, take profit, and stop loss, and none of them can be missing.
What to do if you are stuck with an order
1. Keep a steady mind and don’t act rashly
Mentality is very important. I know it is difficult to control. Human greed and fear are innate and difficult to overcome. However, this is not a good mentality in trading. It needs to be overcome step by step. Especially when holding a single order, the fear will be magnified. At this time, it is very important to keep a calm mind and not operate recklessly.
2. Find the key position and look for opportunities to get out of the trap
This is the same as the key position mentioned above. In fact, unwinding is also an alternative way to enter the market. It just expands the position based on the original risk, which increases your risk factor. Although the entry method is the same, you need to be very, very, very cautious. It is best to let the market test the effectiveness of the key position before entering the market.
3. Covering positions and raising the average price
There are two methods I know of so far.
Method 1: When the price reaches a relatively critical position, enter the market at the original position and average the opening price. This method is suitable for investors with sufficient margin.
For example: A short position is trapped, and the opening price is 52000. No additional positions are made. Look for the key position over 4 hours. For example, the key position is 54000. When the market reaches 54000, observe whether the market meets the entry principle.
If it meets the requirements, the entry position shall not exceed 2/1 of the original position. Then, find the support level in the small level to stop the current position.
Assuming that the position for entering the market to pull the average price is 0.5 BTC, when the market reaches the support level found at a small level, close the position of 0.5 BTC. Repeat this operation when there is an opportunity.
Method 2: When the relative key position is reached, reduce the original position by 2/1, 3/1, or 5/1. This depends on the size of the position. The larger the position, the smaller the reduction. This method is suitable for orders with insufficient margin.
For example: a long position is trapped, the opening price is 61000, and no position is added. The current market has confirmed that it cannot return to your opening price. At this time, you need to look for a key position to reduce your position. For example, the next key position is 59000. When the market comes here, observe whether the market can break through. If it cannot break through, reduce the position. For example, under a position of 1 BTC, the position is reduced by 0.2 BTC.
Then wait for the market to go down. At this time, we also need to look for key positions with high key effectiveness at a large level to make up for the position. We also need to observe whether it meets the entry principle. If it does, add the reduced 0.2 BTC position. In this way, the risk coefficient will not change much, but the average price will be lowered.
Talk about the advantages and disadvantages
Method 1:
Advantages: fast unwinding time, sometimes greater profits may be obtained
Disadvantages: The position is too large, and there is a high possibility of further loss.
Method 2:
Advantages: lower risk and the position remains unchanged
Disadvantages: slow unwinding time, high possibility of being blown up by a wave
4. Reduce risk
Risks are always greater than benefits. My personal philosophy is that only by knowing how to control risks can we better retain current profits. All operations need to be centered on reducing risks. For example, when entering the market, the position margin ratio is always kept below 5%.
Okay, that’s all for today. If you have any questions or opinions, please feel free to discuss them in the comment section.
I hope everyone can achieve "Investigating Things to Gain Knowledge". Thank you for watching. This is a sharing channel focusing on technical analysis. See you next time.
$BTC
