(Trend Trading Method)
(Trend Trading Method) The book provides a more detailed definition of trends using Dow Theory and establishes a trading system based on it. It includes many basic technical explanations, such as trend lines, turning point lines, boundary point A, etc. There are also more complex discussions, such as new perspectives on wave theory and candlestick techniques, along with a large number of practical case studies. I think this book is quite comprehensive and provides a deep understanding of trading systems.
I do not recommend everyone to learn very complex wave theory, as it is difficult to understand and offers little help or significance to trading after mastering it. Instead, the most basic candlestick theory, how to draw trend lines, how to draw turning point lines, and how to find boundary point A are easier to learn, simple and practical. As long as you can apply them flexibly, the trading results will definitely be good.
The technical methods in this book are worth learning, but there are also their own problems. Now (trend trading method) has been released to the 3rd edition, the previous versions had simpler content and mainly explained three methods for trend trading:
One method is to follow the trend line for trend-following trading,
One method is to follow the channel line for trend-following trading,
One method is to use trend lines, channel lines, and boundary point A to filter trends for trading.
After reading the content of the book, I chose the first method of trend line breakout for going long and short, to do trend-following trading. The method is very simple, but a bit too rough. Why do I say that? Because I encountered problems during practical execution.
1: The standard for drawing trend lines is unclear, and in practice, it will become smaller and smaller. Although the book has a clearer definition for drawing trend lines, there are still gray areas. The longer you watch the market in practice, the easier it is to focus on the details of market changes, and when drawing trend lines, they will become smaller and smaller, connecting the small highs of market changes. The trend lines become increasingly aggressive, and the trading frequency increases, and technical issues will also affect trading confidence, ultimately making this technical execution impossible (this method is difficult to execute and requires very rich experience to grasp the rhythm).
2: The technical standards of this method are too simple, the error rate in trading is too high, and the psychological pressure during execution is too great. In a volatile market, you will be slapped left and right, continuously stop-lossing; if you make 3 mistakes in a row, you become anxious, 5 mistakes make you angry, 7 mistakes make you furious, and 10 mistakes make you go crazy, ultimately rendering execution impossible (this requires us to have a strong heart, but this method poses too great a psychological challenge).
Most of the technical theories in this book are worth learning, but it does not take into account the clearly defined details of the trading system, leaving many subjective gray areas that may lead to difficulties in long-term execution of the trading system. Of course, we must not deny the value of this book; many fundamental knowledge and trading concepts are explained very clearly and practically, making it worth reading. On the technical side, I suggest you focus on reading Chapter 4 on candlestick theory, Chapter 5 on trend lines, Chapter 6 on turning point lines, Chapter 7 on boundary point A, and Chapter 9 on trend trading method models.