basic principles of trend follow-up

basic principles of trend follow-up

When the price rises, it is bought, and when it falls, it is sold short or held cash. Conversely, the act of picking up a falling stock as a low point or buying it as cheap is not a trend pursuit. This corresponds to watering down, an action that should be avoided in trend pursuit. If the price of the stock you hold is falling, it is the right choice to withdraw instead of buying additionally.

Response to market conditions

The basic principle of trend follow-up is not to buy if the direction of the market changes downward or fluctuates sideways without a clear direction. In areas where there is no trend, a wait-and-see strategy is the best strategy.

purchase timing

In principle, Mark Minervini makes a breakthrough sale. Even if the stock price breaks and then pulls back, it must check the signs of a rebound before buying it, and it rarely purchases a pullback.

It maintains its holdings in the normal and sound adjustment section, but when it crosses the loss line, it is firmly withdrawn. Conversely, when revenue is generated, the weight is increased through additional purchases.

how to deal with a series of breakdowns

In the event of successive loss, the size of the bet should be reduced, and the cut and sharp line should be set tightly. If the loss persists, stop trading, take a break, or go on a trip to relieve the psychological burden. After that, the sale begins again for a very small amount, and if it is confirmed that profits are generated and the probability of success increases, the amount of betting increases.

Importance of money management in case of consecutive losses

Maintaining or rather increasing the amount of bets is very dangerous in a situation where losses continue. Repeated trading and increasing bets out of impatience to recover losses is just a modified form of watering. Because you're telling me not to watering down. You're betting on a larger amount after you quit. That's no different than watering down. On the other hand, when successful trading continues, you should gradually increase the amount of your bets. This is a kind of minnowing principle.

It can maximize long-term returns by making them sell at a large amount when the winning rate is high and at a small amount when the winning rate is low.