Category: Money Tips Date: 2006-09-28
"Buy is also losing money, selling is also losing money" is a trading cycle. Bad trading psychology, fear, blind trading, analytical methods used improperly and so could result in such trading. The author only in the moving average method arising from the use of this strange phenomenon for analysis.
Moving average analysis is the market most commonly used as an effective method of technical analysis. But there are many investors moving average line in the application of the analysis process, often trapped in a "buy is also losing money, selling is also losing money" deal cycle.
1, trapped in a "buy is also losing money, selling is also losing money," the reasons for the transaction cycle
In the use of moving average analysis method to guide the process of trading, as investors have not really understood moving average analysis of the application of essentials, resulting in the following error:
1. Use of moving average line through the sale of pseudo-signal
Moving average lines are fast and slow lane divided, for example, on Line 5, 10, 20, 30, 60 days ... ... on the 5th line of line relative to the 10 line is the fast lane, on the 10th line of the relative is the slow lane; on the 10th line on the 20th line is relative to the fast lane, on the 20th line is relatively slow lane, and so on; weeks Line of five weeks, 10 weeks, 20 weeks, 30 weeks, 60 weeks-line ... ... 5 weeks line relative to a 10-week line is the fast lane, a 10-week line is the slow lane; a 10-week line relative to the 20-week line is the fast lane, 20-week line is relatively slow lane, and so on; on-line the same token.
The so-called trading signal is crossing the slow lane on the fast lane wearing a buy signal is given, or beneath the fast lane the slow lane gives sell signal, which typically focuses on the signal through the sale of two moving averages. According to the effectiveness of division can be divided into an effective signal and the pseudo-crossing through the sale of trading signals (also known as null and void through the sale of signal) (see Figure 1, Figure 2).
Effectively through the sale of the signal characteristics are: the slow lane and fast lane pointing in the same direction; the fast lane along the two lines pointing to the direction across the slow lane; often associated with price trends in the same direction.
Through the sale of pseudo-signal characteristics: fast, slow lane direction is not very consistent; is generally slow lane without direction or the direction was not significant, only the fast lane directional; often associated with price trends in the opposite direction.
When the market price at the finishing stage, there is no obvious trend, then if the investor with the moving average line through the sale of the signal to guide transactions is equivalent to Pseudo-based transactions through the sale of the signal, it is easy to fall into the cycle of chase sell into the transaction, its result will be "buy is also losing money, selling is also losing money."
2. Use of the pseudo-average moving average combination of the sale of the signal
The so-called moving average combination, that is, more than two moving averages of the relative position of combinations. Combination of fast and slow lines according to the relative position of its significance, the average portfolio is divided into short and long moving averages combined average portfolio.
Is characterized by short average portfolio in the slow lane of the fast lane under the sell signal is given, according to the validity of the signal can be further divided into an effective short average portfolio composition and pseudo-short averages. Long average portfolio is characterized by the fast lane to the slow lane above the buy signal is given, according to the validity of the signal can be further divided into an effective long average portfolio composition and pseudo-long averages.
Effective long moving average combination of characteristics: first, before the advent of the average portfolio there is a clear price declines or finishing stage; second, followed by the slow lane the fast lane of the top, and the speed lines point to the same; Third, the average complement each other well , spacing more even modest (see Figure 3).
Pseudo-long moving average combination of characteristics: first, the price is still finishing stage or late stage of prices have been rising; second, the speed-line direction of the large deviation; third, average portfolio of over-divergence, mutual spacing is too large or average slowed , spacing become smaller (see Figure 3, Figure 4).
An effective combination of short average
Characteristics: First, before the advent of short average portfolio has a significant price increases or finishing stage;; second, followed by the slow lane the fast lane of the top, and the speed lines point to the same; Third, the average echo each other, spacing a more even moderate (see Figure 4).
Pseudo-short average portfolio characteristics: first, the price is still finishing phase or the prices have declined in the late stage; second, the speed-line direction of the large deviation; third, average portfolio of over-divergence, mutual spacing is too large or average slowed , spacing become smaller (see Figure 3).
When investors use the error signal to guide the sale of pseudo-average portfolio transactions, and its results into a chase sell into the cycle, "also lose money buying and selling is also losing money."
Second, how to escape from the "buy is also losing money, selling is also losing money," the transaction cycle
Using moving average method of trading, from "buy is also losing money, selling is also losing money," the vicious circle, I believe that in addressing the psychological problems, the need to address the following technical problems:
1. Note that moving average trading signals the validity of
Carefully studied the moving average method of the theory and application of the specific characteristics, focusing on the correct line of distinction between various types of moving average trading signals the validity of research, not to abuse the information, blind transaction. Most of the initial investors involved in futures trading on the moving average analysis of a lack of understanding and failing to identify the authenticity of the signal can easily guilty of misuse of information, blind transaction errors, should be addressed.
2. Correctly grasp the moving average method applied market environment
Moving average price trend line is a descriptive indicator of the effective use of its average portfolio information, can confirm that trend; the other hand, it is generally applicable to strong pricing trends, market analysis occasions.
Market prices to run the rules are: there is a tendency (a strong rise or fall) �No trend (leather finishing, or readjustment period) �there is a tendency �No ... ... so the cycle of the trend. Therefore, investors in the transaction process is not always everywhere can take advantage of moving average method, but only a trend in the price of the occasion to use this method. No trend in market prices stage of abuse of moving average analysis, will be caught "buying is also losing money, selling is also losing money" deal cycle.
Investors should be in the implementation of transactions, prior to identify the target market there is a trend in the market, or non-trending market. If there is a trend in the market, on the use of moving average method, or by other means, such as the swing index.
