Success belongs to those who are good at patiently waiting.
"Trade trends by waiting for pullbacks, trade ranges by waiting for highs and lows, catch rebounds by waiting for volume, trade breakouts by waiting for pullbacks, and catch bottoms and tops by waiting for reversals." These phrases summarize concise strategies derived from trading practice, each encapsulating the core entry strategies and key conditions for different market states and trading opportunities. Understanding them helps overcome impulsive trading and improves trading discipline and win rates. Let me break it down:
Trade trends by waiting for pullbacks.
Understanding: When the market is in a clear uptrend or downtrend, do not blindly chase highs (in an uptrend) or lows (in a downtrend). Patiently wait for a slight, temporary pullback in the opposite direction of the trend.
Core logic:
a, Follow the major trend, counter the minor trend: Align with the main trend direction (this is the basis for a higher probability of successful trading), and look for better entry points during secondary, counter-trend adjustments.
b, Better risk-reward ratio: Entering during a pullback is usually better than chasing up or down, and the stop-loss can be set tighter (for example, below the pullback low/high), leading to a relatively larger potential profit space.
C, Verify trend strength: In a healthy trend, pullbacks usually stabilize at key support/resistance levels (such as moving averages, trendlines, Fibonacci retracement levels) and restore the trend. Waiting for signals that indicate the end of the pullback (like candlestick reversal patterns, disappearance of indicator divergences) can increase the probability of successful entries.
Key: "Wait" - patience is key. Not every pullback is worth trading; wait for critical positions and stabilization signals.
Trade ranges by waiting for highs and lows.
Understanding: When the market has no clear direction and is fluctuating laterally within a price range (ranging market), the trading strategy is to look for shorting opportunities when the price approaches the upper bound of the range (resistance level) and look for longing opportunities when the price approaches the lower bound of the range (support level).
Core logic:
a, Sell high and buy low: Utilize the characteristic of prices repeatedly fluctuating within a range, selling at relatively high prices and buying at relatively low prices.
b, Rely on boundaries: The upper and lower bounds of a range are natural resistance and support levels. When prices touch these points, the probability of reversal is higher. Entering here allows for clear stop-loss settings outside the range boundaries (short stop-loss set above upper bound, long stop-loss set below lower bound).
C, Avoid entering in the middle: Entering in the middle of a ranging market has an unclear direction, making it easy to get stopped out repeatedly.
Key: "High and low points" refer to the boundaries of the range (resistance and support levels). It is essential to clearly identify the range.
Catch rebounds by waiting for volume.
Understanding: After the market has experienced a sharp decline, when attempting to catch a short-term upward rebound, one must wait for a significant increase in volume as a confirmation signal.
Core logic:
a, Counter-trend trading, high risk: Catching a rebound is essentially countering the current downtrend, which carries significant risk. Strong evidence is needed to prove that the downward momentum is exhausted and that buying power begins to dominate.
b, Volume is a signal of momentum transition: A sudden, significant increase in volume (especially with bullish candlesticks) indicates substantial buying pressure supporting sell-offs, which is a strong signal that bearish strength is weakening and bullish strength is increasing, raising the likelihood of a sustained rebound.
C, Filter false rebounds: Weak rebounds without accompanying volume are often just retracements in a downtrend and can easily fail. Volume is an important marker that distinguishes effective rebounds from “dead cat bounces.”
Key: "Wait for volume" - this is the lifeline of counter-trend operations. Without volume confirmation, it’s better to miss out.
Trade breakouts by waiting for pullbacks.
Understanding: When the price breaks through an important resistance level (or breaks down through an important support level), do not immediately chase in. Wait for the price to break out and then pull back near the original breakout price (at this point, the original resistance might become support, or the original support might become resistance) before entering.
Core logic:
a, Filter false breakouts: There are many false breakouts in the market (where prices briefly pierce key levels and then quickly fall back). Waiting for a pullback confirmation can effectively filter out these false signals and improve the authenticity of trades.
b, Better entry points: Entering on a pullback is usually better than chasing the price during a breakout. The stop-loss can be set below the low/high of the pullback (i.e., below the newly formed support/resistance level), making risk more controllable.
C, Confirm support/resistance conversion: A pullback and stabilization validate that the original resistance level has indeed transformed into effective support (upward breakout) or that the original support level has transformed into effective resistance (downward breakout).
Key: "Wait for pullbacks" - do not chase highs or lows after a breakout, patiently wait for the price to pull back and test the effectiveness of the breakout.
Catch bottoms and tops by waiting for reversals.
Understanding: Attempting to buy at the absolute low point in a downtrend (catching a bottom) or sell at the absolute high point in an uptrend (catching a top) is extremely dangerous counter-trend behavior. One must wait for clear, reliable reversal signals to emerge, proving that the trend momentum has indeed exhausted and reversed.
Core logic:
a, Strong trend continuity: "The trend is your friend." In a clear trend, the likelihood of successfully guessing tops and bottoms is very low, and one can easily get stuck halfway up the mountain.
b, Need reversal confirmation: A true bottom/top takes time to form, accompanied by the exhaustion and transition of momentum. Multiple technical signals must be awaited (e.g., significant price reversal patterns - head and shoulders, double tops/bottoms; strong candlestick reversal combinations - engulfing, morning/evening star; critical technical indicator divergences - RSI, MACD; abnormal changes in volume, etc.) to confirm that the trend may have indeed reversed.
C, Right-side trading mindset: Strictly speaking, this isn’t an absolute “catching bottoms and tops,” but waiting for the reversal signal to appear and then entering early in the trend reversal phase (right side), which is relatively safer.
Key: "Wait for reversals" - this is the premise for countering ultimate trends. Without clear, strong reversal evidence, do not casually attempt to catch bottoms and tops. Even if there are signals, this constitutes high-risk trading, and one should trade lightly and have strict stop-losses.
Summary and core ideas:
"Wait" is the essence: The core of all strategies is the word "wait". It emphasizes patience and discipline, waiting for the market to provide high-probability, high-cost-performance entry points that align with your trading strategy and risk management. Overcome the fear of missing out.
Match market conditions: Each strategy corresponds to different market environments (trending, ranging, post-crash, post-breakout, end of trend). Traders must first assess the current market state and then apply the corresponding strategy. Using the wrong strategy (like trading in a range during a trend or chasing breakouts in a range) can lead to frequent losses.
Entry point optimization: The core objective is to find entry positions where risk is controllable, potential returns are relatively high, and the probability of success is supported by technical evidence. Whether it’s a pullback, high/low point, volume point, pullback point, or reversal point, the goal is to better set stop-losses and capture potential profits.
Risk management is the foundation: Regardless of the strategy used, strict stop-loss discipline is the fundamental guarantee for survival and profit. These entry strategies also imply relatively clear stop-loss positioning logic (e.g., below pullback lows, outside range boundaries, below volume startup points, below pullback lows, breaking points of reversal patterns, etc.).
Probability thinking: There are no 100% successful strategies. These strategies summarize experiences that improve the probability of success, but the market is full of uncertainties. It is necessary to combine other analytical tools (fundamentals, more technical indicators, multiple time frames) for a comprehensive judgment, and to manage funds and control risks effectively.
Trading is the art of waiting; patiently wait for the market to issue your trading signal.
