"Who am I? Where am I? What am I going to do?"

This is a classic question. It can help people understand their own position and know their social environment and class status.

Similarly, we can also establish a trading system through similar questions.

What are the problems? Let’s find out together!

Many retail traders have learned trading skills and technical indicators, but have not formed a system, mostly because they are not clear about their own trading style.

Without a confidant, how can you know your enemy?

How to know yourself?

In fact, it is to answer the question: "Which market do I want to trade in? What is my style?

We can first divide trading styles according to market conditions

Most market conditions can be divided into three types: shock type, trend type, and arbitrage type

Different styles come with different ways of thinking.

Trend type: Trade in accordance with the main direction of the market, determine the strength and direction of the trend by identifying trend lines, moving averages, waves, etc., and buy and sell when the trend continues or turns. Suitable for markets with large fluctuations and obvious trends.

If your trading frequency is not high, you can hold on to your purchases for a long time, and you like to take advantage of big and trending markets, then your trading style is most likely “trend-based”.

Oscillating type: Use the market price fluctuations to trade, identify the overbought or oversold state by identifying the support level, resistance level, and consolidation pattern, and buy and sell when the market rebounds or falls. Suitable for markets with small fluctuations and unclear trends.

If you trade frequently, like day trading and short-term trading, and cannot hold on to large fluctuations, moderate fluctuations will be more suitable for you. In this case, your trading style is most likely "oscillating".

Arbitrage type: Trade using market price differences, determine arbitrage space by identifying related products, spot-futures price differences, cross-market arbitrage, etc. When the market fluctuates abnormally or becomes unbalanced, use regression and balance to gain profits. At the same time, pay attention to controlling costs and risks to avoid being hedged or trapped.

If your trading has nothing to do with the market and is only related to the "price difference", then you are most likely an "arbitrage type" player, and your trading style will focus more on risk control.

Knowing your trading style, all that remains is to use the appropriate tools to look for signs in the market and determine your entry position.

The entry positions are generally: previous entry, break entry, callback entry, and position entry. Only after determining your own entry method can you find your own trading conditions and know what method, tools, and signs to use to guide your entry.

Let's take two simple examples:

Assuming that your trading style is [trend-type], your entry method will usually be "breakout entry", that is, right-side trading. For example, when shorting, trend-type trading will usually choose point E to enter.

There is a detailed explanation in .

Regarding right side trading, we are in [Is it better to short when the price goes up? Or is it better to short when the price goes down? ]

Assuming that you have a [oscillation type] trading style, your entry method will usually be "front entry" or "pullback entry".

For example, if you are entering the market short in the above picture, you would usually choose point A or point D to enter the market. When you encounter pressure points during the rise and pullback process, you will choose to enter the market short.

When you have achieved "knowing yourself" and have figured out your "trading style", "which market to trade" and "how to enter the market", and want to further improve and perfect your trading system, then you can further think about these issues and use them to test whether your system is solid.

Why should I do this market?

What is the reason? Is it personality or technical? What is the underlying principle behind it? Is there a certain theory as the logical fulcrum? Based on this, I can think divergently and analyze that such a market environment is worth my doing this period of market.

What is the basis for my choice of entry?

What are the benefits of such an entry? Are there some market principles that support me here? What are they?

If you enter the market without knowing anything, and are very casual, then as soon as a problem arises, you will immediately doubt your own system and want to solve the problem by "changing it". You will waste your time in the process of changing the system, as if changing a method can solve the fundamental problem. In fact, the fundamental problem does not lie in the system itself, but in the people who implement the system.

Do my entry and exit methods stand up to scrutiny?

What kind of testing did you go through for your entry and exit, and what was the effect? ​​What was the sample size of the statistical test, and how was the final data evaluation?

Inspection remains a time-consuming process.

If this process can give you an answer and analysis basis that convinces you, then you will trust the system more.

No matter what system it is or who is executing it, there will be times when you encounter problems such as continuous stop losses and pullbacks. If you think about changing methods or trading systems as soon as you encounter problems, you often end up not making money and wasting time.

Be sure to remember

Every trading system has its own market conditions. What we need to do is to find that market condition instead of always trying to change the trading system to adapt to it, which will be counterproductive.

A complete trading system that can generate stable profits requires traders to spend a lot of time and energy to build. Building the system is a preliminary work. Only with sufficient preparation can all aspects of the system be guaranteed.

at last

If you find it helpful, please like, collect it, and forward it to your friends. You can also follow [Paul High and Low Quant] and grow together on the road of trading!