1. First, clarify what is a wave: the high and low points of a market trend's oscillation range.
To make this range easier to understand, we need to use a simple drawing tool: rectangle.
Take BTC trading pair on a 4-hour chart as an example:
The red area is the oscillation range that comes from the bottom. After clarifying the range, the simplest understanding is to short at the high points and go long at the low points.
So the question arises: what is the trend? Should we go long or short? This raises the second point of knowledge.
2. Moving average
The moving averages in the chart are tools that help us identify trends. When the K-line is above the moving average, it represents an upward trend, especially after a downtrend.
The moving average settings I use are: 20/50/100/200 four moving averages.
When the K-line is above the four moving averages, and when the price breaks through the upper edge of the oscillation range, it is a buying opportunity.
Sometimes you may miss the opportunity to buy. How should you deal with it? At this point, we need to clarify the trend direction to help identify the way.
3. Trend line
Trend line: connect the low point as the starting point with the low points before the high points to draw a ray, and you will get a trend line.
Through the trend line in the image (black), we can observe the direction of price movement.
When the price breaks through the first oscillation range, the upper edge of the range becomes a support level. If you miss it at the first moment, then within the green range, you have many opportunities to buy, because the connection line of the two red low points (black) forms an upward trend line, helping you identify the bullish trend. Follow the trend and you should buy.
However, not every oscillation range will go as you wish, because the market is chaotic. For example, in the upper oscillation range (pink), you see in the yellow area that if you chase and go long, you will get slapped in the face. So how to face the 'slap in the face' incident? Set stop losses, do not have any illusions about the market. If the market proves you wrong, you must be courageous enough to admit it; only then can you maintain a good mentality and start over. You can trade in the green area above to profit. Rather than being unable to extricate yourself from a losing market, if you continue like this, it only indicates one problem: you are not suitable for trading.
Summary:
Identify the trading range (oscillation range), recognize the trend, timely stop loss, and start over.
These four steps are the strategy combination I share with everyone. Of course, we can delve deeper into the above issues, and it is not just these four methods that form a mature strategy combination. However, for ordinary traders, this is enough. Especially the two parts of timely stop loss and starting over need continuous trading to achieve. Otherwise, you just 'know' but cannot 'do'.