Core Logic: Once a market trend is established, it tends to continue. Profits can be made by capturing the early stages of the trend, avoiding sideways fluctuations.
1. Moving Average (MA) Strategy
Principle: Use moving averages of different periods (such as 50-day, 200-day) to determine trend direction, with crossover signals (Golden Cross / Dead Cross) as the basis for entry/exit.
Example: Go long when the short-term moving average breaks above the long-term moving average (Golden Cross), and short when it does the opposite.
Applicable Scenarios: Unidirectional trend markets (such as super cycles in commodities, trends driven by macroeconomic factors).
Advantages and Disadvantages:
Rules are clear and easy to quantify, suitable for beginners.
Easily triggers stop losses in ranging markets, has significant lag (long-term moving average turning points can be delayed).
2. Bollinger Bands Strategy
Principle: Draw a 'channel' of price fluctuations based on standard deviation. When the price breaks above/below the channel, it is considered an overbought/oversold signal, combined with trend direction for entry.
Example: When the trend is upward, buy when the price touches the lower band and rebounds; when the trend is downward, sell when it touches the upper band and falls back.
Applicable Scenarios: Entering during pullbacks in a trend or buying low and selling high in a ranging market.
Advantages and Disadvantages:
Dynamically adapts to market volatility, capable of identifying trend strength (narrowing channels indicate a potential change).
Single indicator signal has a lower win rate and needs to be combined with other tools (such as volume) for filtering.
3. Donchian Channels Strategy
Principle: Track the price highs and lows over N periods; go long on a breakout of the upper band and short on a breakout of the lower band (core logic of Turtle Trading rules).
Example: Enter long on a breakout of the 20-day high, and stop loss on a drop below the 10-day low.
Applicable Scenarios: Breakout trading in the early stages of a trend, suitable for trending commodities (such as crude oil, copper).
Advantages and Disadvantages:
A pure trend capturing tool, avoiding subjective judgment.
Frequent false breakouts, risk control is needed with position management (such as ATR stop loss in Turtle Trading rules).
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