1. Market momentum concentration
Trends represent the mid-to-long-term consensus of market funds (institutional and main capital direction). Trading with the trend equals 'borrowing the strength of the big trend', resulting in a naturally higher success rate.
For example: In a bull market, even buying at a high point, trend continuation can still lead to profit; in a bear market, trying to catch a rebound is like 'catching a flying knife with empty hands'.
2. Risk controllability
Setting stop losses for counter-trend trades is difficult (trend strength may break through all support/resistance), while stop losses for trend-following trades have clear logic (such as trend line break).
Data evidence: Trend-following strategies are effective in the long term (like the Turtle Trading rules), essentially 'cutting losses and letting profits run'.
3. Time value
The stability of trend cycles (weekly/monthly) is far higher than short-term fluctuations. The essence of trading is 'exchanging time for space', with trends providing the greatest time-to-return ratio.
Two, Structure (secondary weight): Key pivots in the trend
1. The trend's 'gas station'
Structure (such as consolidation patterns, key support/resistance zones) serves as a pause point for trends, not a reversal point. It helps confirm the strength of the trend:
Horizontal structures in an uptrend are often a buildup before a breakout;
Breaking key structures (like head and shoulders) indicates a possible trend reversal.
2. Anchors for trading rhythm
Structure provides clear entry/add position locations (such as retracing to a trend line), and stop loss positions (lower edge of structure), achieving a 'high risk-reward ratio' strategy.
For example: Buying at the lower edge of an ascending channel, stopping loss on a break, with controllable space; chasing price on a breakout at the upper edge of a channel, with clear targets.
3. Validation of market sentiment
The process of structure formation reflects the tug-of-war between bulls and bears. If prices quickly reverse at key structures, it indicates that trend strength still dominates the market.
Three, Points (last weight): The trap of precision
1. Randomness interference
Short-term points are greatly affected by noise (high-frequency algorithms, news disturbances). Pursuing 'precise points' can easily lead to over-optimization, ignoring the bigger picture.
Case: Missed a subsequent 100-point market movement by placing an order 1 point cheaper that did not get executed.
2. Vague correctness > precise error
When the trend and structure are clear, point deviations (such as buying at a secondary low) do not affect the essence of profit; whereas in a counter-trend situation, even buying at the lowest point may lead to a stop loss due to trend continuation.
3. Risk-reward ratio thinking
Successful trading relies on a 'high risk-reward ratio' rather than 'high win rate'. Over-focusing on points often leads to holding on to profitable trades (fearing a pullback) while stubbornly holding losing trades (hoping for a recovery).
Four, Hierarchical application in practice
1. First, trend: Use weekly charts to determine bull/bear/sideways markets, deciding to 'go long, go short or wait'.
2. Then, structure: Identify key support/resistance and breakout points on daily charts to plan trading zones.
3. Finally, points: Use candlestick signals and volume in hourly charts to find entry opportunities, rather than pursuing absolute prices.

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