According to the length of the operation cycle, traders can be divided into short-term traders, medium-term traders, and long-term traders. Each type of trader has its own advantages and disadvantages. The following will analyze the characteristics and advantages and disadvantages of each type of trading.
Short-term trading, including intraday trading, is usually the first choice for most technical novice traders. It can evaluate the performance of a transaction in the shortest time, experience the excitement brought by the transaction as quickly as possible, and effectively avoid the risk of gaps caused by overnight positions. However, in the long run, there are very few successful short-term traders, and the rare short-term masters can be called geniuses in trading. Short-term trading requires traders to have high concentration and market sense. Emotions will have a great impact on trading performance, and require sufficient energy and stable emotions during the trading process. The transaction is completed in a one-time entry and exit manner. Although the position is high, the stop loss amount for a single transaction is controlled very low, usually not exceeding 1% of the total funds. The frequency of transactions is high, which will generate very high transaction fees, and ultimately rely on a higher probability of winning to achieve overall profitability. Short-term trading has very high requirements for timing, and the funds that can be carried are small. Most of the selected varieties are varieties with sufficient liquidity and active prices, and the contracts traded are main contracts. It is a patent of the technical school.
Mid-term trading usually refers to swing trading, which is the choice of most traders, including many traders who have made stable profits. Mid-term trading can bear the reverse fluctuations of the selected products within a certain range, the timing requirements are not high, and the risk of overnight gaps can be tolerated. The capital carrying capacity and handling fees are moderate. It requires traders to have a clear judgment on the medium-term trend of the market and the risk preference within a period of time, and appropriate increase and decrease of positions can be made during the process. The frequency of transactions is moderate, ranging from a few weeks to a few months. Usually, a complete transaction can withstand a loss of 5%-10% of the total funds, and the risk-return ratio is above 1:3.
The cycle of long-term trading is very long, at least more than one year. Many masters or gurus of trading are advocates of long-term trading. Long-term trading can carry reverse fluctuations in a large range of selected products, with the lowest requirements for timing, the largest amount of funds, and the lowest handling fee. It requires traders to have a clear understanding of the long-term main line and core logic of the market. It is a paradise for fundamental traders, but some technical masters have made full use of the increase and decrease of positions in the process of trend and obtained amazing returns. The frequency of transactions is very low, and there is no operation for a year or even several years. Usually, a complete transaction can withstand a loss of 15%-20% of the total funds, and some can even withstand a loss of 30% of the total funds. The risk-return ratio is above 1:5.
The appropriate trading cycle is not only related to the trader's time to watch the market, his agility of thinking and emotional stability, but also evolves with the development of trading experience, the increase of trading funds and the increase of trader's age. On the one hand, the shorter the trading cycle, the higher the concentration and adaptability of the trader, but every trader will eventually grow old. As long as you make a living by trading, you will face the transition from short to long trading cycles. On the other hand, with the increase in the scale of funds, many varieties have to choose long-term trading to carry larger funds and the price impact brought by opening and closing positions. Therefore, the vast majority of traders have experienced the transformation from short-term to swing trading on the road of trading growth, and some traders eventually transform into long-term trading.
Determining the operating style that suits you is an integral part of trading. It is related to important links such as choosing the operating cycle, formulating entry and exit rules, and trading mentality.
Common operation modes: 1. Short-term trading; 2. Swing trading; 3. Medium- and long-term trading;
The trading style should be determined according to one's own trading philosophy, the amount of funds, the risk tolerance, the expectation of return, personality traits, and one's own trading ability. No matter which trading method is adopted, it cannot deviate from the principle of easy execution. In general, the trading method of band plus moderate short-term is the most adaptable to market changes.
Small capital traders who have high requirements for returns and poor risk tolerance are more suitable for intraday short-term or intraday swing trading. Large capital traders who pursue stable returns are more suitable for swing trading plus medium- and long-term trading, and are not suitable for single short-term trading.
Short-term trading: It is divided into intraday short-term trading and overnight short-term trading. (All operations within the fluctuation range of the previous day are defined as intraday short-term trading)
Short-term trading essentials:
1. Intraday short-term: only trade when the market has a clear breakthrough trend in a short period of time, enter when there is a breakthrough (fast with the trend, slow against the trend), quickly stop loss when the trend is unfavorable, only actively open and close positions, do not increase or reduce positions, and do not participate in adjustments. Close positions immediately when the volume stagnates or profits are taken, and wait for the next opportunity.
2. Overnight short-term: generally follow the trend of the current daily level.
Swing trading: It is divided into intraday swing trading and overnight swing trading. (The most profitable intraday swing trading is the varieties with clear trend and the varieties with false breakthrough at the opening)
Essentials of swing trading: 1. Find the right time to enter the market, enter the market at the starting point of the market formation or the end of the trend; 2. Calculate the risk after making a profit and choose the opportunity to increase the position; 3. Set up reasonable protection and stick to the position after breaking away from the cost; 4. Reduce positions and transfer losses to protect profits when a double top or double bottom appears; 5. Once the reversal is confirmed, leave the market decisively and test the reverse position.
Medium and long-term trading: Open a position at a reasonable position according to the general direction of the market or fundamental conditions and hold it until the reason for holding the position disappears or the reversal of the general market trend is established.
Mode selection method
For a long time, traders, especially novice traders, have either never considered which trading mode to use, or do not know which trading mode to use, or use one mode to deal with all trading opportunities. Since their trading ideas are very vague, the trading results are not ideal. So how to choose a trading mode?
1. Choose based on personal conditions and abilities
1. Part-time traders should not do intraday trading, but choose short-term (accumulate and enrich trading experience as much as possible) or medium-term trading;
2. Inexperienced traders can do less and observe more in the intraday or short-term, use simulated orders to verify and accumulate experience in judgment, and use actual orders to accumulate operational experience and cultivate operational skills;
3. Traders with strong analytical ability, rich operating experience and strong financial strength can choose medium- and long-term trading, and at the same time use intraday short-term or intraday trading to expand capital utilization.
(II) Selection based on market operation status and operation time
Although the operation cycles and principles of the four operation modes are different, the one-way strong trend or oscillating operation still has the highest success rate. Therefore, no matter what transaction you make, you should follow the trend as much as possible and adapt to the market;
1. When the market is running in a box, it is recommended to choose intraday or super short-term trading;
2. When the market is oscillating upward, choose the swing trading mode at the support level; during operation, choose the intraday or short-term mode according to the strength of the recent days;
3. When an important reversal pattern is formed or a long-term consolidation ends, choose the medium- and long-term trading mode; during operation, you can choose the intraday or short-term mode according to the strength of the trend in recent days;
4. When holidays are approaching, it is recommended to choose intraday or short-term trading mode;
5. When you are about to face important resistance and support levels, it is recommended to choose intraday or short-term trading mode;
6. When important commodities and economic data are about to be released, it is recommended to choose intraday or short-term trading mode.
7. When a major event occurs, it is recommended to choose intraday or short-term trading mode;
8. When the price trend accelerates, it is recommended to choose intraday or short-term trading mode.