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Forex beginners often start with intraday short-term trading. Here are ten key points to help you build an effective forex short-term trading system.
1. Trading Philosophy
A trading system is the quantified representation of your trading philosophy. Short-term traders should establish the philosophy of "bull vs. bear, balance and breakthrough." Recognize the power dynamics between bulls and bears, and develop systematic analysis and trading methods accordingly.
2. Risk Identification
Understanding the source of risk is crucial for controlling it. Causes of loss include technical issues like countertrend trading, capital management problems such as heavy positions and overnight trading, and psychological issues like gambling and wishful thinking.
3. Market Volatility Characteristics
Market volatility is divided into balance markets (range trading) and breakthrough markets (trend trading). A balance in a large timeframe leads to a significant breakthrough, while a balance in a smaller timeframe results in a minor breakthrough. Large timeframes determine market attributes, while smaller timeframes identify entry points.
4. Types of Profit Opportunities
Develop strategies based on different market conditions. Use small profits accumulation for regular markets and combine short-term and swing strategies for breakthrough markets.
6. Technical Research Key Points
Balance Markets: Identify consolidation patterns, use support and resistance for high sell low buy.
Breakthrough Markets: Identify trend breakthroughs, track major movements, and apply high sell low buy.
7. Capital Management
Short-term trading capital management recommendations:
A trading system should include:
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1. Trading Philosophy
A trading system is the quantified representation of your trading philosophy. Short-term traders should establish the philosophy of "bull vs. bear, balance and breakthrough." Recognize the power dynamics between bulls and bears, and develop systematic analysis and trading methods accordingly.
2. Risk Identification
Understanding the source of risk is crucial for controlling it. Causes of loss include technical issues like countertrend trading, capital management problems such as heavy positions and overnight trading, and psychological issues like gambling and wishful thinking.
3. Market Volatility Characteristics
Market volatility is divided into balance markets (range trading) and breakthrough markets (trend trading). A balance in a large timeframe leads to a significant breakthrough, while a balance in a smaller timeframe results in a minor breakthrough. Large timeframes determine market attributes, while smaller timeframes identify entry points.
4. Types of Profit Opportunities
- Major Trading Opportunities: Key segments in trend markets, with a strategy of swing trading.
- Secondary Trading Opportunities: Movements within wide range trading, using intraday swing and short-term strategies.
- Quick Profit Opportunities: Sudden drops and surges, best approached with short-term trading.
- Garbage Trading Opportunities: Narrow range movements prone to frequent stop losses, best filtered out.
- Risky Trading Opportunities: Countertrend rebounds or corrections, suitable for ultra-short-term or filtered trading.
- Technical Trading Opportunities: Non-mainstream, less common movements requiring extensive experience.
Develop strategies based on different market conditions. Use small profits accumulation for regular markets and combine short-term and swing strategies for breakthrough markets.
6. Technical Research Key Points
Balance Markets: Identify consolidation patterns, use support and resistance for high sell low buy.
Breakthrough Markets: Identify trend breakthroughs, track major movements, and apply high sell low buy.
7. Capital Management
Short-term trading capital management recommendations:
- Short-Term: Use 30-50% of funds for single entry and exit.
- Intraday Swing: Use staggered entries (20+20+20%).
- Swing: Use staggered entries (20% base position, 20% high sell low buy, 20% at breakthrough).
A trading system should include:
- Market attribute assessment
- Determination of trading direction
- Selection of trading strategy
- Entry conditions
- Stop loss settings
- Position monitoring
- Exit strategy
- Trade analysis and summary
- Follow the trend, avoid subjective predictions
- Control risks, avoid heavy positions and overnight holdings
- Identify market states, design appropriate trading models
- Assess trading opportunities, filter out low-value ones
- Master trading instruments, maintain consistent profits
- Strictly follow the trading system, maintain psychological stability
- Trade with the trend, avoid guessing tops and bottoms
- Focus on trends, long the strongest, short the weakest
- Trade confidently, avoid frequent trades
- Trust and execute the trading system
- Clear stop losses, execute decisively
- Never hold heavy positions overnight
- Maintain stable profits, avoid heavy losses in single trades
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