The cycle is a key link in trading cognition. It connects trading strategies and carries the laws of price movement. It is the part that best reflects the depth of a trader's understanding of the market.
Whether it is rising or falling, the price movement needs to be attached to a certain cycle. For example, if there is a rise at the 15-minute level, it means that if the K-line is set to 15 minutes, you can observe a significant rise in the price. But if the K-line is set to 1h or 4h or higher, this rise will become insignificant compared to the surrounding K-lines.
According to this idea, a smooth rise of 4 hours needs to be analyzed in a more detailed way at a smaller level. Therefore, the rise of 4 hours seen in 15 minutes actually contains many details, which may be a multi-stage rise + adjustment; if it is adjusted to a smaller level such as 1 minute, the market details of 240 K-lines will be unfolded, and a magnificent bull market can be seen.
If you are doing intraday trading, you need to observe enough market details on that day to help determine the timing and position of entry, such as 1min 5min. You cannot do intraday trading by entering and exiting the market multiple times a day based on the daily or hourly lines. However, you can rely on the macro level to determine the direction.
Assuming that the trading frequency is two to three times a week, it is more reasonable to choose the hourly line. You cannot choose the 1-minute line to look for opportunities. Otherwise, you will fall into extreme trading details. The principle is simple, but in actual implementation, many people will worry about gains and losses when holding positions, and look at the rise and fall of the 1-minute K-line movement.
Here are some ideas for understanding the cycle, so that you can continue to think about it in combination with your own trading system:
1. In addition to the commonly used 4h 1h cycle, there can also be 1.5h 2.5h cycles. The cycle is just an observation perspective, which is a subjective observation of the market. Generally speaking, there is no clear answer as to whether a period of adjustment structure is at the 15min level or the 5min level, but the resolution is appropriate in a certain cycle.
2. The larger the cycle, the more stable the price movement; on the contrary, the smaller the cycle, the more chaotic the price movement. There are many factors that affect market price fluctuations, but all factors must ultimately be reflected in the actual funds entering the market to drive price movements. These funds must be large enough to be effective in a larger cycle, while in a small cycle, not too much funds can cause a period of market ups and downs. Therefore, a large cycle can absorb more market funds in and out than a small cycle, so it will be more stable in the graph. It also shows that the inertia of a large cycle is stronger, so many systems look for directions from a large cycle.
3. The large and small cycles need to be observed together. The graphics have a visual impact, and this impact is for all market participants. For example, at the 4h level, a very regular triangle adjustment has come to an end. So there is reason to believe that most people are waiting for the breakthrough of this regular adjustment and use the breakthrough to make transactions. However, if you wait for the breakthrough to intervene in the transaction, you have already lost the point with the highest profit and loss ratio. The best position to intervene in the breakthrough is actually before the breakthrough occurs. At this time, you should switch to the small cycle to look for trading opportunities.
