The most important aspect of foreign exchange trading is to make orders based on foreign exchange trends, which is commonly referred to as trend trading. The editor has always emphasized to everyone the importance of trading with the trend, but how to grasp the trend of foreign exchange has made it difficult for many beginners.

Recently, a friend complained to the editor: I also know to trade with the trend, but I don't even know the current trend. How can I know if it's a trend or a reversal?

It is indeed not an easy task to accurately grasp the trend of foreign exchange, but it is not without any means. Below, the editor will introduce a commonly used method that foreign exchange beginners can easily learn in the next five minutes!

BOLL

Brin

The Bollinger Corridor is composed of upper, middle, and lower tracks, which divide the range of price fluctuations into four regions. The upper track, also known as the pressure line, the middle track, also known as the price average line, and the lower track, also known as the support line.

The BOLL channel is very effective as a technical indicator for tracking trends, and it is also convenient to apply.

Below, the editor will briefly introduce the various situations that occur in the BOLL channel and the trading strategies we should adopt in each case. We hope to be able to effectively help everyone!

When the price is between the middle and upper tracks

When the price runs in the area between the BOLL middle and upper tracks, as long as the price does not fall below the middle track, it indicates that the market is in a bull market.

Suggested practice: At this point, our trading strategy is to buy at low points and not consider short selling.

notes

solution

It should be noted that the time cycle of applying the BOLL channel, during which so-called bargain hunting occurs, is best done during a cycle that is one time level lower than the current cycle. It is better to use the BOLL line as a bargain hunting point with a flat trend and breaking through the lower track.

two

When the price is between the middle and lower tracks

When the price runs in the area between the BOLL middle track and the lower track, as long as the price does not break through the middle track, it indicates that the market is in a bearish market.

Suggested practice: At this point, our trading strategy is to sell at high points and not consider buying.

notes

solution

It is also important to note that the time period of applying the BOLL channel may be lower than the midpoint of the previous time level BOLL channel during a short period of pressure.

It is only good to short when the trend of the BOLL channel is relatively flat at this time level.

three

When the price runs along the upper track

When the price moves along the BOLL track, the market is a unilateral upward trend, which is generally an explosive situation.

【 Suggested practice 】: Those who hold multiple orders must hold onto them, as long as the price does not deviate from the upper track area, patiently hold onto them.

notes

solution

In this situation, the detachment of the K-line rarely occurs in a direct downward direction, usually through horizontal adjustments of several K-lines to flatten the BOLL channel and detach it from the upper track of the BOLL channel.

Afterwards, it is possible to directly reverse the direction or suddenly break through the flat BOLL online track and then fall again. Generally, breaking through the flat upper track can lead to short selling, and after breaking away from the BOLL upper track with a few K lines, multiple orders can be high.

four

When the price runs along the down track

When the price moves along the BOLL downward trajectory, the market is a unilateral downward trend, which is generally a rapid downward trend.

【 Suggested practice 】: As long as the price of short orders held does not deviate from the downward trajectory, it is also necessary to hold them patiently.

Same principle as before

five

When the price runs in the mid rail area

When prices operate in the BOLL mid rail region, the market exhibits an oscillatory trend, and the market will oscillate up and down in this region. This market has the greatest destructive power on trendsetters, often resulting in losses caused by slaps on the left and right.

【 Suggested practice 】: At this point, our trading strategy is to sit tight and avoid this period of oscillation.

notes

solution

Oscillation within one time level means that the BOLL channel is used to be much higher and lower in the next time level.

six

When in the shrinking state of the BOLL channel

After a period of rise and fall in prices, they will enter an oscillatory rest within a certain range, and the oscillatory price range will become smaller and smaller. The BOLL channel exhibits contraction in three tracks: up, middle, and down. This state is a precursor to the arrival of a major market.

【 Suggested practice 】: At this point, our trading strategy is to wait and see for short positions to rest.

notes

solution

The so-called contraction of the BOLL channel actually occurs after a very strong market trend, so during contraction, it is a short-term opportunity. Take advantage of the high altitude and low altitude of the BOLL channel, pay attention to setting a stop loss, and even radicals can set a break point in a safe position to pursue orders.

seven

When the BOLL channel suddenly expands after shrinking

When the market undergoes a period of oscillation and consolidation in the BOLL channel contraction state, the BOLL channel will suddenly expand, indicating that an explosive market has arrived, and from then on, the market will enter a unilateral market.

【 Suggested practice 】: In this situation, we can actively adjust our position and build a position in line with the market.

notes

solution

In the same sentence, verify the situation at the previous time level. If this is the case for several consecutive time levels, you can proceed with the order in the same direction.

For bulls, if the pullback is small, you can see further; Short sellers need to make a lot of pullbacks to see further.

eight

When there is a false breakout in the BOLL channel

When the BOLL channel undergoes a contraction and before a large market trend arrives, there is often a false breakout market, which is a trap created by the main force before making a move, commonly known as the "short trap" or "long trap" in textbooks.

【 Suggested practice 】: We should be alert to the occurrence of this situation, and the best method is to eliminate risks through our position control. When we found out it was a trap, we still had enough funds and time to adjust our position!

notes

No matter how user-friendly the BOLL channel is, it is only a technical indicator. When making orders, it is necessary to combine multiple technical indicators.

While breaking through the BOLL channel, we also need to look at the situation of other pressure and support levels, as well as the positions and deviations of indicators such as KD, MACD, and RSI.

Finally, in my opinion, the BOLL channel is like a river channel, and in most cases, the market goes from one bank to the other, and then back to this bank from the other.

A breakthrough at a time level is an expansion of the river channel at that time level, but if this expansion is placed at the previous time level, it is likely to only run towards the other side of the bank. If you have any further questions about the use of the Brin Channel, please feel free to leave a message and communicate with the editor!

The necessity of stopping losses

Uncertainty and unpredictability are the fundamental characteristics of the sales market, which are fundamental to the existence of the market and are also caused by risks in transactions. This is an unchangeable characteristic. There is always no predictability in transactions, and all predictive analysis is just a possibility. Transactions based on such possibilities are of course uncertain, and uncertain personal behavior must have countermeasures to manipulate the expansion of its risk. Stop loss is caused by this.

Stop loss is naturally caused by people throughout the entire trading process, not intentionally made, but a subconscious act of investors to protect themselves. The uncertainty of the sales market determines the importance and necessity of stop loss existence. Successful investors will have different trading methods, but stop loss is a mutual characteristic that ensures their success. Global investment master Soros once said that project investment itself does not have risks, and only uncontrollable project investments have risks. Learn to stop losses well and never deal with losers. Stop loss is far more cru