Understanding the core methods for grasping market trends

Everyone knows that trends are important, and everyone wants to chase and grasp them, but in real trading, there are very few investors who can actually spot trends and take advantage of them to profit. In both bear and bull markets, there are still as many losers in the market as in any other state. When the trend is uncertain, we hope for the arrival of the trend, but when the trend is really formed, we still get nothing. Trends are important to us on the surface, but they are difficult to use in specific transactions, and they seem worthless in specific transactions. Why? How should we understand and take advantage of trends?

The textbook tells us that the concept of trend is too simple, as simple as someone telling you to go south to the South Pole. With such a general concept alone, we cannot truly understand and grasp the trend. During the operation of the trend, we will encounter many obstacles, which will make it impossible to judge whether the trend will continue. This is because investors ignore the feature that the trend is composed of fluctuations. The direction of the trend often masks the disorder of fluctuations, but for investors, price fluctuations are more attractive to him.

Investors spend most of their energy fixating on volatility, but volatility is disorderly and random, and this focus only confuses your view of the market and ignores the true direction of the market. The market often moves in the opposite direction of the trend, and this reverse volatility often manifests itself in a daunting form. When this happens, your position in the same direction as the trend is difficult to maintain and the position squaring away.

The maxim of "weight over price" should be used with caution. It is the "weight over price" philosophy that guides many investors to enter the market at inappropriate prices and then be ruthlessly purged by the market. After being purged several times, the market continues to move in the direction you like. At this time, you can only sigh at the greatness and unpredictability of the market. The complex feelings of seeing right and doing wrong make it difficult for you to accept, and then re-hope that the next trend will come, thus giving up the opportunity of this trend from the bottom of your heart.

Trends are made up of fluctuations. To be precise, an orderly trend is made up of disordered fluctuations. Looking back, the trend is quite perfect, and this way of looking back and re-understanding the trend necessarily makes you ignore the importance of the random fluctuations that make up the trend. However, it is this disorderly fluctuation that makes you look right and wrong.

Focusing on disorderly fluctuations makes investors lose money in trends, thus making them irrelevant in our trading!

To understand trends, you must first understand that trends are made up of fluctuations. If you really want to follow trends, you must filter out disorderly fluctuations, give up the theoretical profit opportunities that fluctuations bring you, and treat fluctuations as worthless price movements. This requires you not to pay too much attention to the fluctuations in market prices, making yourself relatively numb, but at the same time more stable. The ups and downs of prices will make your view of the market rise and fall, and focusing too much on fluctuations will fail to grasp the main direction of the market. You can look for some trading tools to grasp the main direction of the market, rather than focusing on the movement of prices to grasp the main direction of the market. For example, some traders will refer to thePepperstoneSuch platforms provide analytical tools to help them better understand market dynamics.

I personally think that moving averages and trend lines have this function, and both tools have a good effect on tracking trends. Moving averages are curved trend lines. Different markets, different varieties must use different moving averages, and different states of the market must use different trend lines. They can filter out disorderly price fluctuations to a large extent, thus reducing our wrong trades. It is crucial that we can truly grasp the trend of the market through trading tools rather than by paying attention to price fluctuations!

Being able to withstand loneliness and having tenacious endurance is also an important factor in grasping trends. Being able to withstand loneliness and having tenacious endurance is not innate, but is born on the basis of a deep understanding of the market. We already know that trends are composed of up and down price fluctuations, which can cause your capital account to rise and fall. Being able to tolerate the ups and downs of capital is an important factor in whether you can stick to the trend.

The vast majority of investors get off the trend train early because they can't stand the ups and downs of capital and the temptation of price fluctuations. From my personal experience, it is quite difficult to get a trend right, and we all make mistakes before we get it right. It is very expensive to really find a big opportunity, so once you make a trend, you must not come out easily. Unless your trading tools tell you to leave the market, you can hold it forever and hold it for as long as you can. Otherwise, the price you paid in the early stage will be difficult to make up for. There are very few really valuable trading opportunities in the market, only a few times a year, or even once. Once you give up early, we will get nothing.

Please note that what we are discussing today is the understanding and application of trends, not for short-term traders and swing traders. This also shows that trend chasers have to learn to give up many short-term and swing trading opportunities, which again requires us to be relatively numb. You have to have a fairly clear pursuit goal, namely: I only pursue trend profits and give up volatility opportunities! This alone is enough to turn off the vast majority of investors, which is why so few people actually seize the trend.

Trend profits come at a considerable cost, both in the form of constant stop losses before and at the end of a trend, and in the torment of market fluctuations, which is difficult for investors who have not made such profits to understand. We often only see the profits that the trend brings us, but not the huge cost of making this profit. We are often trapped in a beautiful imagination of the trend: how beautiful it would be to enter the market when the trend is formed and exit when the trend ends!

This kind of imagination beautifies the trend, but at the same time, it also leads to investors who do not understand the trend, so they cannot grasp the trend! Without a certain trading ability and understanding of the market, grasping the trend can only be a good wish. The trend market is not suitable for most investors in essence, and most investors will never be able to get rid of the pursuit of volatility. This is like "Ye Gong loves the dragon". On the surface, we all love trends, but in fact we prefer fluctuations in our bones!

Give up the preference for fluctuations in order to chase trends. You can consider whether you can do it yourself, otherwise don't pursue trend profits blindly! And getting trend profits is far from as easy and beautiful as it seems. You need a strong heart and a deep understanding of the market.