The market continues to go in a certain direction, which is the inertia of bull and bear markets.
Written by Michael Turtle
When you usually watch discovery, you must have seen a group of cows rushing towards the edge of the cliff, even if the ones in front fell to death, they continued to rush behind! This is the "herd effect" in investment. The market continues to go in a certain direction, which is the inertia of bull and bear markets.
Trend definition
By definition, the formation of a bull market trend often results in huge profits for long-term holders, causing short-term investment entry and causing a positive cycle; when used on a line chart, it is 20-day moving average > 60-day moving average > 120-day moving average (below: black Line > red line > blue line) If you simply use this principle to buy and sell, enter the market when the trend is established and exit when it is broken. Although it is impossible to make profits in the entire bull market, it can flash most of the crashes.
Briefly describe the past
(Trend will be formed, or just entered into the market; trend breaking run ex: the black line confirms and the red line crosses downward) Enter the market at the beginning of 2016, and exit the market at the beginning of 2018: dozens of times the profit
- Enter in May 2019, exit in September: about 60% profit;
- Entered in early 2020, exited in March: loss of about 10%;
- Re-entry in May 2020, exit in May 2021: about 5 times the profit;
- Enter in August 2021, exit in November: the profit of this transaction is about 10%
Moving average rule
The above operation can cooperate with some subjective strategies:
1. Subjectively judge the relative position of the market (for example, although the trend has formed in August 2021, the market is relatively high, so you need to be careful)
2. Degree of deviation: the less deviation of the moving average, the longer the entanglement, the safer the bullish trend will be (the longer the horizontal, the higher the vertical)
3. Add EMA judgment, EMA often reacts earlier than MA, you can be alert to the trend in advance 4. In the bull market, backtest the 60 or 120-day moving average before increasing the price.
The trend has just formed, the most comfortable entry point
If you can enter the market when the trend is just formed, bad news is often flying all over the sky at that time. Internet celebrity V must be saying that a certain event or a certain economic data will bring about a major economic crash. If you have trading experience, this is the most comfortable entry point. This position is the so-called market growth in doubt.
Postscript: personal experience
Thinking back to my early years when I was just learning to invest, I spent hundreds of thousands of dollars to learn various indicators from my teacher. In addition, I graduated from National Taiwan University in economics, and I also studied the impact of many economic figures on the market. In addition, the quality of life of watching the market every day is extremely poor. But after learning to use the moving average to judge the trend, the performance is much better, especially the US stock market / $BTC This kind of commodity with obvious trend only needs to operate in a large cycle, which is more comfortable.
