What Is Trend Trading?
A trend trader is a type of investor who believes that no matter what causes the price change, it always runs in one direction. A round of rises or falls is a continuous rise or a continuous decline, forming an up or down. Down trend. They believe that once a rising trend is confirmed, you can buy, and once a falling trend is confirmed, you should sell.
Trend trader
Right!
- Chinese name
- Trend trader
- Brief introduction
- Means a class of investors
- Definition
- Professional term
- Involved Disciplines
- economics
- A trend trader is a type of investor who believes that no matter what causes the price change, it always runs in one direction. A round of rises or falls is a continuous rise or a continuous decline, forming an up or down. Down trend. They believe that once a rising trend is confirmed, you can buy, and once a falling trend is confirmed, you should sell.
- Psychoanalysis
- Willing to buy high / sell low [1]
- If traders can't adhere to this principle, they can skip the rest. The reason why trend trading is successful is that few people are willing to buy high / sell low.
- Here are some psychological tips on this issue:
- Willing to give up a considerable proportion of floating profits;
- Remember that no one knows when the trend will end. Don't try to predict the end of the trend, hold a position firmly and let the profit run.
- When we are used to linking success with profit (failure and loss), naturally we only remember those intuitions that tell us the top and bottom (then we don't need to give up a certain amount of floating profit), and forget those We predict when the market turns to failure. I call this phenomenon Trader Mental Syndrome.
- Here are some psychological tips on this issue:
- Insist on trading after a series of small losses;
- Patience is the key to becoming a successful trend trader.
- Psychological tips on this issue:
- Ability to combine discipline and flexibility;
- Disciplinity means sticking to successful strategies; flexibility means giving up strategies when market characteristics change.
- Discipline and flexibility seem to contradict each other. The most successful traders trust their strategies and are willing to persist in difficult times. At the same time, they also realize that the characteristics of the market may change. When changing, they are willing to change or even abandon current strategies.
- When implementing the trend following system, willing to trade smaller positions (for example: the maximum risk of any position does not exceed 1% to 5% of the asset) to withstand the test of a callback
- The following two situations may violate this principle: to equalize the syndrome, when we increase leverage to try to get rid of the loss quickly; to wait and see the regret syndrome, when we see profit and decide to increase investment to get more returns.
- Here are some psychological tips on this issue:
- Adapting to 1% to 5% transactions generates most of the profits;
- This can be linked to a major principle of trading in mechanical systems: don't miss any trading signal. It also means that there are no holidays for traders. Excluding the few best-performing transactions in the test results, you will find that holidays and mechanical system transactions are incompatible. Moreover, because 1% to 5% trading will contribute most of the profit, the trading system should include a mechanism that can regenerate trading signals when the trend repeats.
- Here are some psychological tips on this issue:
- Willing to hold positions for weeks or even months;
- Trend traders succeed because they know how to accumulate small profits into large ones. This requires psychological preparation for holding positions for weeks or even months.
- Here are some psychological tips on this issue:
- Used to slower transactions and more analytical processes;
- Many trend traders will feel physically and mentally exhausted if they need to make countless trading decisions within a trading day.
- Here are some psychological tips on this issue: