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The easiest way to trade the trend - the four-week rule

{}Posted in2023/2/26 5:29:36 | 4Browse

foreign exchange prices are often rapidly changing Forex rebate for Exness confusing, but there forexc cashback forexhrebate a saying circulating on the trading floor "w ForexrebateforExnessh the forexrebates as a companion", there is no denying that this has almost become a traders paramount advice before making a trade The reason why the trend is so important is that it provides you with a clear direction for future trading. In general, when prices come out of a series of highs and lows, it means it is time to look for opportunities to do more; conversely, the trading strategy that can be set is to go short on the highs. With the emergence of increasingly complex and imaginative systems and indicators, investors tend to ignore those simple, basic tools, and they work quite well and have stood the test of time today, to share one of the easiest trend trading cashbackforexexnesss - the four-week rule the most important iron rule of Western speculation is that The most important iron rule of Western speculation is: "Follow the trend and do it. The so-called follow the trend means to follow the trend of the past price behavior to construct the future trading scheme, and never trade against the trend of the past price behavior because follow the trend of the past price behavior to trade will be supported by its continuity and get the corresponding success, and against the trade will incur the corresponding failure. The "Rule of Four Weeks" tops the list in the technical field? The Financial Review published a paper in which more than twenty technical trading systems were tested and studied over a ten-year period, and finally concluded that the weekly rule topped the list, followed only by the moving average weekly rule is in line with the trend and can be used to filter the reversal signals formed by similar moving average crossovers, such as when the 5-day SMA breaks upwards through the 10-day SMA, forming an upward trend, the weekly The four-week rule was invented by Richard Donchian and is a complete automatic trading system that follows the trend. This may explain why the use of a four-week interval has been so successful and may be the best time horizon. What are the advantages and disadvantages? A system based on the four-week rule is simple: as soon as the price rises above the highest price in the previous four calendar weeks, the short position is closed and a long position is opened as soon as the price falls below the lowest price in the previous four weeks (full calendar), the long position is closed and a short position is opened. As we have emphasized before, the trend compliance system works poorly when the market is in this sideways state without a trend, and we can also modify the four-week rule to make it discontinuous. In other words, a "four-week breakout" must occur before we can open a position, but as soon as a one- or two-week signal in the opposite direction occurs, the position is closed and the trader stays out of the market until the next four-week breakout signal. The system is firmly based on the principles of technical analysis, and the signals are given automatically, clearly and distinctly, and because it follows the trend, it practically guarantees that the user is always on the right side of the market whenever there is a major trend. "Another feature of this system is that the trades it generates are often less frequent, so its commission costs are lower, which is what many money managers value, making this system (or its variants) very popular. As with all trend-following systems, the opponents blame it for not being able to capture tops or bottoms, so what does a trend-following system actually do? The most important point is that the four-week rule performs as beautifully as, if not better than, many of the trend-following systems; at the same time, it has a strength: its amazingly simple The advantage of the interval breakout method is obvious: stick with it and you basically cant miss a really big trend in the sense of a wave Why? Although breakthroughs are not necessarily followed by trends, but any wave of trend quotes will almost certainly have breakthroughs In other words, breakthroughs are necessary but not sufficient conditions for trend quotes Therefore, as long as the breakthroughs are held, it is possible to capture the trend This is the same as keeping a rabbit: not with a tree the rabbit will definitely crash on it, but the rabbit crashes where there are basically trees (in the big forest) Tips: Around The four-week rule has many modifications and improvements The four-week rule has many modifications and improvements Traders can also think of the weekly rule signal as simply a technical indicator that identifies price breakouts, trend reversals, etc. The weekly rule breakout signal can also be used to supplement other techniques, such as moving averages, to provide similar validation as a filter The weekly rule can also be optimized and adjusted for different markets Traders can also adjust the time horizon of the weekly rule for different markets. We do not use the weekly rule mechanically for every market, but rather on a market-by-market basis, adjusting the time horizon according to sensitivity requirements.
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