Author of this article: SF (Hangzhou intraday short-term trading master)
Every futures trader will experience the source of "top", "random" and "dizziness".
I don’t know if you who are doing futures have thought about a small question. Is the futures market we see real? I believe that everyone will answer in unison: "True". Yes, our country's futures market is "open, fair, and just." The relevant departments are also very effective in the supervision of futures and protect the fundamental interests of investors. However, from the perspective of retail traders, why is the futures market still the law of 28, or even the law of nine? What factors have caused traders to lose money easily and make profits from the technical level?
Newton was hit by a ripe apple falling under the tree, thus discovering universal gravitation. In fact, the same is true for the futures market, all because of thinking about a lot of small issues about futures trading, and the basic issues have gradually become profitable. Let us now discuss the small issues that determine success or failure ①——time.
Maybe you would say that this problem is not a problem at all. It has existed since ancient times, otherwise human beings would not be able to live and work normally. Is there any other statement at this time? Keep an open mind, this must be one of the very important dimensions in trading. After all, the futures market is expressed on a computer screen with a two-dimensional plan composed of horizontal axis-time and vertical axis-price.
Natural time: Time is a parameter used by humans to describe the process of material movement or the occurrence of events. Determining time depends on the law of material cycle changes that are not affected by the outside world. The time measurement system based on the rotation of the earth is called the universal time system. The time measurement of hour, day, month, year, and century belongs to the category of calendar in astronomy. From the definition, we find that time is objective and based on the rotation of the earth. It is also the carrier used by humans to describe the development and change of things. Therefore, time is a metric that humans jointly determine and default based on the rotation of the earth. The opening and closing time of the futures market is a standard set by the exchange.Therefore, the opening and closing time rules are an application of natural time.
Since the date of its birth, the futures market has its own time period, instead of completely following the natural time given by human beings. What is the time of the futures market? Maybe everyone is talking about the volume, price, time, and space in the market every day. Maybe you are very familiar with the relationship between the earth and the moon or the cycle in the astronomical calendar to predict the rise and fall of the target species, and this is a derivative application from natural time. As for the futures market, it also has its own time rules, just like the biological clock of human beings. Since there are humans, the biological clock belongs to everyone and exists independently of natural time.
Maybe you know, maybe you don’t, here is the first time to uncover the mystery of time-futures time. On the surface, we all think of the time in the futures market as natural time. But the truth is not the case. In the detail column of the trading software, we will see the time of the transaction: minutes: seconds. For example:
The graph expresses: at what price, how many lots are traded, position difference and other information, and this data usually defaults to milliseconds, such as 1 second. For 5 pieces of data, we will use 1s=1000ms to classify, and the default 200ms is the unit of time recording. This is still not the final answer. During the period of inactive transactions, only 1 transaction or even no transaction record may occur in 1 second, for example:
This analogy appears in 1s=1000 The conclusion of, contradicts the conclusion of Figure 1 just now. Therefore, we can determine that milliseconds cannot be precisely the time carrier for the occurrence of trading activities.
What is the futures time? Since the day the market was born,There is a time period of its own, and traders named it "TICK". The Chinese meaning of the word TICK: make a ticking sound; go ticking. In futures, tick is defined as the smallest time period. That is: when the amount of orders in the market changes once or the price changes once, it is called a tick. At the same time, the price does not need to change. As long as the amount of orders changes, it is a tick. This is the time period of the futures market itself, and it is also the smallest time carrier. This time period is different from natural time such as milliseconds and seconds. It is an inherent unit of the futures market to record the number of occurrences of traders' actions. Note: It is the unit of time that records the number of occurrences of a trader's behavior. Tick is the time unit. We connect the prices corresponding to the tick in order, so that there is the smallest fluctuation period in the market, the TICK chart (lightning chart). So, what is the relationship between TICK and natural time, and how do these two kinds of time affect the occurrence of trading behavior? And how should we, as traders, use these two kinds of time to avoid risks and obtain our own profit? Let us uncover these subtle, yet constraining secrets to the profit and loss of each trader's account.
If you carefully analyze the handicap details in the software, it is not difficult to find that in the detailed columns of the Shanghai Futures Exchange, China Financial Exchange, and Dalian Commodity Exchange, there are usually 3 tick changes in the second at the opening and closing. In other times during the opening state, usually 2 TICKs per second or less than 2 ticks. ZCE’s varieties are quite special. The opening and closing seconds are usually 4 or 5 ticks, and the rest of the market is less than or equal to 3 ticks per second. In this way, we get a conclusion: tick (future time) is completely different from natural time. The biggest difference is that natural time is uniformly distributed. This uniform distribution is predictable, and there is also a time cycle, while futures time is unevenly distributed. We don’t know when a trader’s behavior will happen, only it will happen. If there is no tick from the opening to the closing determined by natural time, we can think that there is no futures time today. We use a legend to illustrate that tick is not equal to natural time.
through the legend, We also observe the difference between natural time and futures time with our eyes , so why does this happen? In fact, the principle is very simple, because futures time is based on the occurrence of traders' behavior, and natural time is the default law of mankind. Trader behavior does not occur evenly according to the passage of natural time. Sometimes, transactions are more active in one minute, and sometimes transactions are relatively light in one minute. During the active period, the trading behavior is active, so that the futures time is close to natural time; during the light period, the trading behavior will occur much less, so will compress natural time and cause natural time distortion . You may ask, what can we do when we know this? Let's start to discuss how the above affects our transactions. It is because of the occurrence of trading behavior that has the profit and loss of our account.
Have you seriously thought about what constitutes our trading activities? To put it simply, there are several steps in the judgments we make based on the market, the decision to open and exit the market, and what are the key factors that affect them? Why open long here, why open short there, why stop loss or take profit? What are we based on? When I often chat with my friends about this issue, many of my friends who have been trading for many years will say, "This issue seems to have never been considered and sorted out seriously." At the same time, some friends will say that I enter and exit the market according to indicators; some friends say that I enter and exit the market according to the K-line pattern; some friends say that I enter and exit the market according to different cycles; some friends say that I enter and exit the market according to fundamental factors ; Some friends said that according to the speed and strength of the board, entering and exiting, etc., it can be said that a hundred flowers bloom together and a hundred schools of thought contend. These statements are correct, and they are the trading methods suitable for their own personality that everyone has learned and traded for many years. Here we discuss the process of completing a transaction from the perspective of intraday short-term (intraday short-term, that is, we temporarily ignore fundamental factors and only focus on changes in the chart).
the indicator we use,It is usually called a momentum indicator, and its focus is to use statistical methods to calculate the rate of price fluctuations per unit time, that is, the speed and slowness of price fluctuations per unit time. The pattern we use, such as the five-three structure in wave theory, focuses on the impulsive wave or the main ascending wave. The impulsive wave has a large amplitude and a long time; a callback wave has a small amplitude and a short time. We trade in different time frames. The key is to find waves that resonate in different cycles, so that large cycles protect small cycles and so on. These strategies all have one thing in common, that is, time and magnitude. With time and amplitude, we can get a very critical variable-speed.
In the market, many trading strategies combine speed. For example: a wave of upward trend, after each callback, the time to rise again becomes shorter and the amplitude becomes smaller, so we come to a conclusion that the rising speed is weakened, and we can judge that this wave of rise is likely to enter the final stage. At the same time, we may see top divergence through technical indicators, the exhaustion of the upward trend from the smallest time period in different time frames, the rising wedge in the traditional pattern from the price pattern, and so on. Assuming that we open a position at this time, many traders usually do not go long. Strong31strong is decisive because of the clue that the speed of the uptrend is beginning to slow down. And because it is an uptrend at this time, many traders will not open short, after all, the trend direction is still up. Most traders will choose to wait and see. Their basis is that the speed of the rising market has begun to weaken, but it is still an upward trend. If you want to open a short, you will "operate against the trend" and give up decisively. To open more, the speed is too slow, the profit-loss ratio is not good when driving in, or it will soon turn into a downward trend. Therefore, everyone chose not to operate and continued to observe the subsequent development and changes of the market.
Through the above description, we find that trading decisions are actually made through changes in market speed as important clues. In the same way, the occurrence of stop-loss and take-profit behaviors also plays a key role in speed, and exit behavior is the inverse calculation of entry behavior. For example: when we hold a long position and the market is slowly falling at this time, we may not stop loss,After all, fell very slowly, and it is very likely that will reverse upward at any time. If at this time, suddenly a K line rushes down violently, is very fast , I believe most traders will stop loss from . After all, a large loss will allow many traders to clearly judge the future development direction of the market is to continue to fall, thus making a stop loss behavior.
To sum up, we get conclusion①: The most important reference point for traders before trading is the speed of market development; Conclusion②: Through the speed of market development, we can make the future direction of the market. Pre-judgment is made to make the decision to open and close a position.
Let’s think carefully about the completion of one of our trading activities. Is it ? By judging the speed of the current market, we can predict whether the future market will continue or reverse relative to the current market, thereby opening a position After entering the market, according to the gradual development speed of the market, verify your previous prediction to make a stop loss or take profit decision. With this clue, we can split our trading process into several fixed modules, which module has a problem, solve the problem of which module, and once it is determined, we will continue to repeat the correct trading behavior. This is actually the concept of a generalized trading system. Since the focus of decision-making is speed, as long as we can grasp the changes in speed, then there will be a consistency standard for transactions. However, speed is only a result, it is determined by the ratio of amplitude to time. Amplitude is the distance the price travels per unit time. This is relatively simple. As long as the time range is determined, it can be achieved by subtraction.
At this time, the problem is coming,How long is the standard? For example: 9:00:01 to 9:00:59. It is one minute, which is 60 seconds. At this time, the time is fixed, and we can describe it as the range of price fluctuations from 01 to 59 seconds every minute. Then divide by the time, can get the average speed of the price in this minute. Then calculate the average speed for the next minute, and compare the two speeds to get the speed change, and then make a prediction of the future of the market. This is the calculation method that everyone has been using.
Now we know that there are two times in the futures market, one is natural time and the other is futures time (tick). Which time should we use as the standard when calculating speed? Let's ponder this seemingly trivial matter.
Assumption: a certain minute from the opening to the closing, the price rose by 6 tick units, its average speed in this minute is: 6/60=0.1. That is: an average increase of 0.1 tick unit per second. In the next minute, from the opening to the closing, the price continued to rise by 6 tick units. The average speed obtained at this time was the same, still an average increase of 0.1 tick units per second. This is the result calculated using natural time as the time standard. We now introduce the futures time (default 1 second 2 ticks) in the first minute, within 60 seconds, 120 ticks occurred; in the second minute, within 60 seconds, 100 ticks occurred. At this time, when calculating the average speed, we set the time unit as the futures time, and use a fixed increase of 6 bounce units to obtain the speed v①=6/120=0.05. That is: an average increase of 0.05 per tick. The speed v②=6/100=0.06. That is: an average increase of 0.06 per tick. Since 0.05 is less than 0.06, we can conclude at this time: the second rising speed is greater than the first rising speed, and the market growth rate has begun to get faster.
We use fixed natural time as the parameter,The amplitude is variable, and the average speed obtained at this time is the same, that is, it is a uniform movement, and the prediction for the future of the price is to continue. We will fix the range, and the futures time itself is a variable, so the obtained conclusion that the average speed has accelerated, the prediction for the future is that the market is more likely to rise. In summary, we have got two conclusions about the prediction of the future market. The reason is that speed is an important basis for us to make predictions. Therefore, in actual transactions, traders who adopt different time standards will have different average speed values, and may even make completely opposite judgments at the same time.
Through the discussion on the small issue of time, we adopted different time standards, and under the same amplitude, we got different results. This is something that is worthy of our consideration. Often, I joked with my friends: trading losses are not your fault, but the fault of time. Everyone can think about whether you have experienced similar problems. Due to the perceived time deviation, the speed judgment has been deviated, the wrong judgment has been triggered, the wrong position has been opened, and the stop loss has ended. If you have had such a problem, we will continue to discuss in-depth together in the following chapters to uncover the mystery of futures time, start from every detail, improve our advantage in trading, and gradually enter the stable stage.
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