Farming for a living by trading
Chapter 2Cluster psychology
11. What is the price
Quotation systemEvery time "tick" it means that a transaction between the buyer and the seller is reached. Long buying drives prices up, short selling promotes prices down, and waiters create a tense atmosphere that forces buyers and sellers to buy and sell quickly, and the market is unpredictable.
Each price represents a temporary consensus on value reached between the buyer, seller and waiter at a certain trading point. The birth of each price pattern on the screen is the result of the interaction of a large number of traders.
A savvy trader will sneak in when the market is calm and make high profits when the market is restless. The actions of amateurs are completely opposite. They often chase the market when prices soar, and then lose interest in the market when price fluctuates relatively smoothly.
The goal of a rigorous technical analyst should be to discover the balance of strength between long and short sides and bet on the side that will win. If the bulls are stronger, you should buy and hold; if the bears are stronger, you should sell and bear; if the two sides are evenly matched, wise traders should choose to wait and see, let the bulls and bears fight each other, and seize the opportunity to follow the winner to make a profit.
12. What is the market
The market is a collection of a large group of people. Everyone thinks that their IQ is higher than others and can make enough money from others. This is an extremely cruel battlefield, and everyone is a competitor to each other.
The masses have enough power to create a certain market trend. The masses may not be rational enough, but they are much stronger than any single individual. Never trade against trend. Once the upward trend is established, all you can do is buy or wait and see. Never short just because the price is too high - again, don't go against the trend. There is no rule that you must run with the crowd, but at least you should not move against the crowd.
transaction means a game of fighting for each other, either you try to make profits from others or others try to take profits from you - which is why it is so difficult to reach a deal. It is particularly difficult for you to make money from a transaction. No matter who wins and who loses on both sides of the transaction, brokers and on-site traders always have to draw fees.
13. Trading scenario
Most people do transactions based on some rational factors and some irrational factors. Rational factors are reflected in the hope of making a big profit, while irrational factors are reflected in the stimulus seeking and gambling psychology. Most traders are not actually aware of their irrational motivations.
Learning to trade will take a lot of time, money and energy. A very small number of individual traders can reach professional standards and rely on trading to support themselves. Professional traders are extremely serious about their behavior. They meet their irrational goals outside the market, while amateur traders express irrationality in the market.
The Achilles heels (the only fatal weakness) of most institutional traders is that they must trade, while individual traders are free to choose trading behavior.
Most individual traders waste this great advantage due to excessive frequent trading. Individuals who want to defeat institutional traders must develop their patience and eliminate unnecessary greed. Remember, your goal is to trade profits, not trade frequently.
14. You form a loose market with the market group
bulls and bearers, and bet on future prices to rise and fall. Each price represents the group consensus at a certain point in the market, so we can also think that traders are actually betting on the future perspectives and emotions of the group. Group emotions cruising between optimism and pessimism, hope and fear. Most people cannot fully implement their trading plans because they can easily lose themselves in group emotions and behaviors.
Many traders are often confused, why does the market always reverse immediately after they stop loss of ? This is because the market group is often shrouded in the same dark cloud called fear - everyone throws their positions together. After the bears are gone, the market has no choice but to rise. At this time, the bulls returned to the market, and the group once again forgot their previous fears because of greed, and entered a new round of buying frenzy.
group power can completely crush all individuals. No matter how smart you are, you can’t compete with the group, you have only one choice – join the group or act independently. If the price trend is opposite to your prediction, stop loss and exit. Never challenge the group - what you have to do is simple: use your judgment to decide when to join the group and when to leave and watch.
Only by insisting on thinking and operating from an independent individual perspective for a long time can you become a successful trader. No matter what kind of trading system it is, the most vulnerable part is the trader itself. Unplanned operations or violations of the original planned operations will eventually lead to losses in the transaction. Trading plans must be formulated by rational individuals, and the group develops an emotional trading strategy that is likely to be impulsive.
15. Trend Psychology
The price rise and fall are not due to the difference in quantity, but because the degree of greed and fear between buyers and sellers in the market has changed. The rate of
rise depends on the trader's sentiment: if the buyer's sentiment is only a little stronger than the seller, the market will rise slowly; if the buyer's sentiment is much stronger, the market will rise rapidly. The job of a technical analyst is to analyze when the buyer’s mood is stronger and when this strong momentum ends. When the market rises, the short side's profits shrink until it loses, and feels trapped, the short side is eager to close the position, and the price also shows a parabolic rise. Fear is a stronger mood than greed: short positions are closed to a faster rate, although not lasting long.
A market technical analyst must go beyond the limitations of factions: not relying on the camp of long or short, but simply seeking the truth. A biased bull will look at the market chart and say, "Where do I buy?" A biased bear will try to find where to short the market chart and look at the same market chart. A top technical analyst is not affected by the bias of long and short faction.
When making money transactions, you don’t need to predict the future. You need to extract information from the market to find out whether shorts and longs are under control. You need to measure the strength of the dominant groups in the market and use it to determine how likely the existing trend will continue. You need to practice conservative money management to gain long-term survival and wealth accumulation. You must observe the function of your mind and avoid tending to be greedy or fear. If these principles are adhered to, traders will be more successful than most forecasters. The successful transaction of
is built on three pillars. You need to analyze the balance of long and short forces. You need to practice fund management. You need to strictly obey your trading plan and avoid being overly excited or frustrated in the market.
to be continued.
Fried insects
October 24, 202200:16:29
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