For trends, one can refrain from taking profits until the trend reverses.
For short-term trading, taking profits is essential. After taking profits, even if the market continues to rise, do not regret immediately re-entering, as this will change the trading model, often leading to stop losses. If it is a small cycle, there are many trading opportunities; just patiently wait for the next entry opportunity. At the same time, do not amplify risks; each trade's stop loss is a limit that cannot be enlarged.
If the grasp is relatively strong, one can fully load the position at once and wait to reach the target for take profit. This handling has relatively high initial risk, but once the market moves, the risk is not significant (it can withstand pullbacks, as long as it does not return to the entry point, there should be no problem).
If the grasp is not strong, one can first establish a small position and then add positions when in floating profits. This handling has relatively low initial risk, but as the positions increase, the average price will quickly align with the market. If the stop-loss value does not increase risk and does not amplify, the ability to withstand pullbacks will quickly diminish.
Therefore, one cannot unconditionally increase positions in floating profits. A maximum position can be set; if it exceeds this position, no additional positions will be added. As long as there is no pullback during the position-increasing phase, if the subsequent market does not pull back to the position-increasing phase, the position is relatively safe.
One can also add positions during market adjustment phases (or after a portion of the pullback), so the starting point for withstanding pullbacks will be the price during the adjustment phase, which may be better than unconditional adding positions.
Although there is no holy grail, there are factors to pay attention to. Adjusting slightly may help withstand some pullbacks and reach the target profit.
The movement of candlesticks is ever-changing. Regardless of the type of movement, there is not much probability advantage. However, if certain movements occur, a significant profit-loss ratio can be achieved through increasing positions, which is the trend + rolling positions method.
These movements have the inevitable characteristic of: continuous breakouts + pullbacks not exceeding the leverage tolerance.
Several possible operational patterns:
Enter after a breakout, unconditional rolling positions, stop loss if the pullback exceeds the limit, take profit upon reaching the limit.
Enter after a breakout, roll positions after the candlestick closes, stop loss if the pullback exceeds the limit, take profit upon reaching the limit.
Enter during pullbacks, do not roll positions if the previous high/low is not broken, and start rolling after breaking the previous high/low. The rolling method can refer to the first two types; overall, it feels that short positions are suitable for unconditional rolling (because shorting is quick), while long positions can roll both unconditionally and after the candlestick closes.
More complex methods may also involve reducing positions and lowering leverage (taking some floating profits while increasing tolerance for pullbacks) after rolling for a period. After the pullback ends (and once again breaks through), leverage can be increased again. However, fundamentally, this method is also a variation of the previous methods, testing mindset and experience, making it difficult to automate; it may be best to avoid this method for now.
Trading is essentially a gamble. This method clarifies the conditions for profit and loss in gambling; it just depends on whether the market provides the opportunity.
Trading is essentially gambling; this method may encounter consecutive losses, so good position management is crucial. Don't get carried away; use small amounts to gamble, otherwise, one may be quickly wiped out.
Martingale is also a gamble, but Martingale has continuous pressure (not knowing whether the trend will come at night). This kind of rolling position is also a gamble but may have shorter periods of pressure. If the market trend is poor, it can be avoided, allowing for a good night's sleep.
This method fears encountering reversals, trends with large fluctuations, and prefers trends with small pullbacks.
In practice, rolling positions is quite difficult, especially in an environment dominated by quantitative trading, where significant drawdowns often kill high leverage. Therefore, rolling positions must be approached cautiously as unconditional rolling inevitably results in low win rates, and with low win rates, one will not dare to take large positions, ultimately leading to limited gains; everything must be viewed dialectically.
So I thought of a method to enter and roll positions, entering/rolling during pullbacks, and rolling on the first candlestick after a breakout. In other cases, do not roll.
In a bull market, it makes people hesitant to enter, so there will often be quick drops to trigger high leverage, while quickly returning to position, using displacement to replace time. If such a situation occurs, it indicates that the upward trend is not over and may continue to rise.
Entering during pullbacks also fears encountering reversals, which is unavoidable; it’s all about probability, but it's better than chasing highs and getting burned.
For manual operations, entering during pullbacks and taking profits at previous highs is better, as it results in a higher win rate.
Trading is essentially gambling on formations. There are three possibilities: not reaching the expected formation, resulting in a stop loss; just reaching the expected formation, resulting in a take profit; or making extraordinary profits but losing out due to active profit taking.
In fact, there are various methods for exiting: absolute stop loss, absolute take profit, trailing stop loss (take profit), triggering trailing stop loss (take profit) after reaching a profit threshold, and triggering trailing stop loss (take profit) after reaching a holding period.
From a single instance, there is no absolute good or bad, as the current direction is uncertain. Over the long term, each method has different win rates and profit-loss ratios. As long as the statistics show a positive trend, consistency must be maintained, and long-term adherence will yield probability advantages.
CTA methods involve entering on breakouts and continually moving stop losses (take profits). In the long run, this is positively expected, but the win rate is low.
Manual operations can enter during pullbacks. Taking a long position as an example, taking profit at the previous high and stopping loss at the previous low may also be positively expected, but one must bear the psychological impact of missing out.
Manual operations can also enter during pullbacks, break through floating profits, and actively take profits after reaching profit targets, which might also have positive expectations. The key lies in consistent persistence.
Several possible formations:
Breaking through the previous high, moving forward without looking back, indicates a major trend.
Breaking through the previous high, suddenly dropping, breaking through the previous low, forms a V-shaped reversal.
Breaking through the previous high, quickly dropping back, then continuing to rise.
Breaking through the previous high, experiencing a period of movement before starting a pullback, with a long pullback duration, forming a consolidation range.
After forming a consolidation range, with previous highs and lows, various types of movements mentioned above emerge.
If a trend appears, following the original trend provides a time and directional probability advantage. If going against it, one should take profits quickly and exit in a timely manner.
The market will certainly have breakouts, but the strength and sustainability of these breakouts are uncertain, often accompanied by false breakouts. Therefore, when dealing with all currencies, this entry point should not be used, as a particularly strong breakout is required for profitability. Most of the time, it is unlikely that all currency pairs will simultaneously be particularly strong, making this not a good selection point for entry. However, if dealing with specific currency pairs with multi-cycle trends, this is the least bad entry point because making a trend inevitably involves breakouts, and strong trends do not necessarily have suitable pullbacks. Therefore, to stay on the trend train, this entry method must be used.
Breakouts must have pullbacks, but the timing and strength of pullbacks are difficult to grasp, especially in strong trends, which often experience multiple divergence pullbacks or particularly small pullbacks. Therefore, this is not particularly easy, unless using a small position Martingale, but small position Martingale loses its gambling value.
After a pullback, it can either reverse (recognize stop loss), turn into consolidation (stop loss or take profit, depending on the set amplitude), or break through again. One can try this: if it reverses, recognize the stop loss; if it consolidates, it depends on luck; if it breaks through again, it may be significant enough for take profit.
If it is a pullback, it is generally quick, with rapid amplitude returning to position, followed by continued market movement. Therefore, the waiting amplitude can be larger, and positions should not be opened unless there is a significant pullback.
All currency pairs can use large quick pullbacks for screening; in such cases, when volatility rises, it is very likely to lead to a second breakout above the previous high.
This is equivalent to being unable to catch the first wave (not knowing the strength of the breakout), unable to bottom-fish or top-pick (low success rate in strong trends), and only waiting for large pullbacks (volatility rising + large pullbacks for the second wave trend). If it is a strong trend without significant pullbacks? Then do not act; the market is abundant, just wait patiently.
From the analysis above, rolling positions are not used much because the unconditional rolling success rate is low. Therefore, even if rolling positions, it is done after a certain percentage of pullback. The logic of rolling positions will be discussed later.
What was mentioned above is waiting for pullbacks in rising markets; there may also be strategies for significant drops, which will be researched later.
This is equivalent to: not acting on breakouts, not bottom-fishing or top-picking, not acting on small pullbacks, only acting on quick large pullbacks; after entering, setting large stop losses and take profits (to give room for market volatility), making profit-loss ratios (can be set as 2:1 or 3:1), if there is a profit and then a pullback occurs, positions can be rolled appropriately, increasing position size, potentially hitting the take profit immediately upon a surge.
After volatility rises, the win rate of rolling positions is very low; it is only suitable to increase positions (rolling positions) during significant drawdowns, and it is not appropriate at other times.
Rolling positions rely on luck, and the success rate is very low. Therefore, the safety of the principal is paramount. Start rolling positions only after moving the stop loss to the closing push position. Because rolling positions anticipate big market movements, when significant market movements occur (there will always be such luck), the missed volatility from the initial closing push moving stop loss is negligible; if the big market does not come, preserving the principal is the most important thing. Therefore, the priority is to close the push stop loss, not to roll positions first.
There is also unconditional rolling or pullback rolling. After thinking it over, unconditional rolling is preferred. Unconditional rolling + first closing push + small position in a single currency is suitable for betting on altcoin market trends, ensuring opportunities for explosive rises and falls are not missed. Pullback rolling + non-closing push + large positions are suitable for clearly trending mainstream currencies, for coins with certain long cycles, such as anticipating next year's bull market, then pullback rolling is advisable, as there will inevitably be significant pullbacks in the long cycle, waiting for the pullback to roll positions afterward is safer.
