Trading Basics: Consolidation and Trend

It is very important to distinguish the trend into consolidation and trend, which involves the macro strategy setting of trading, which is more important than micro operation.

1. Most trends are consolidation, and 90% of the breakthroughs fail, which will cause divergence. This means that most of the time, trading can only do short-term differences at this level, and cannot upgrade positions and cannot mess up the pattern.

2. Large-level trends are hard to come by, on the one hand, they must be identified through technical aspects, and on the other hand, they must dare to try positions. Improving trading skills can increase the ability to grasp trends, which is an important criterion for distinguishing whether a trader is good or not. The trend probability is low, but the main source of profit for trading, each three buys may be the main rising wave, which requires traders to be bold and careful, and dare to bet at key nodes.

3. In terms of operation, the biggest difference between trend and consolidation is the position level. Since the trend will grow a center, as long as the position is built in the A center, it is very safe at this level, with a relatively large profit base, you can chase the position, short-term differences in the center, and clear the position, and subsequent operations will be very flexible. This is not available in consolidation.

4. Consolidation corresponds to three types of central upgrades: extension, expansion, and dilation. Among them, dilation is the most difficult case to handle. Due to the vertical merger of multiple centrals, the central boundary is unclear. Extension and dilation are better, but there is also a problem of poor profit and loss ratio. Therefore, for the trend in consolidation, the best strategy is: do not participate. Only participate in the smoothest market in and out, and do not participate in the constipated market in the central. This is also the trading concept advocated by Master Chan in the Chan Theory.