The futures market is fascinating but confusing, and people who are deeply involved in it always want to explore its essence in order to obtain an eternal profit secret. Different people, in different environments, with different experiences, subject to different restrictions, observe and explore the futures market from different angles, the sentiments or so-called "conclusions" are often very different, resulting in The trading patterns that they think are profitable are also very different. The wealth of the futures market, which seems to be easily accessible, makes us eager to do so, even if we can't help it, it can't hinder our desire to chase it.
The vulgar is like me, and I am one of them. I want to explore the nature of futures from my own perspective so that I can find a profit model in this market that can convince myself.
I think that from the perspective of a profit-oriented trader, the nature of futures can be interpreted from two aspects: 1. Futures are the derivative of the spot; Second, the futures are the game of humanity. If you stand at the observer's point of view, designer's point of view, operator's point of view or other angles, the nature of futures can have other meanings.
First of all, futures are not born without reason. Every futures variety and futures contract are specific to the spot, and futures are born for the spot. Although the relationship between futures and spot is sometimes tight and sometimes loose, and occasionally even runs counter to it, in any case, futures are the derivative of the spot. Futures and spot are inextricably linked. This relationship is inseparable. It must exist, and there is a way to follow. From this perspective, if the research reveals the spot of a certain variety, it will be relatively smooth to make money in the futures market.
Secondly, every volatility, every price, and every transaction of futures is produced by “man-made”. It is made up of a wide and democratic vote with different opinions. Behind every volatility, every price, and every transaction is the impact and compromise of power, opinion, emotion, and mind between people. It is the process and result of the human game between different participants in the futures market. From this perspective, if we thoroughly analyze the characteristics of human nature and understand the common law of human nature, we can make money relatively smoothly in the futures market.
Because I understand the nature of futures is the derivation of the spot, and the second is the game of human nature. Therefore, from my perspective, the fluctuations in futures prices, the formation of trends, the sawing and transformation of the market, etc., which I have seen, can be understood as The process and result of the change of the relationship between the supply and demand of the spot and the human game of the participants. Although the change of spot supply and demand relationship and the player humanity game both affect the futures price all the time, I can also simply define the main decision power of futures long-term price fluctuation as the supply and demand relationship of the spot; Determining power is defined as the game of participants' humanity. In this way, perhaps my futures trading becomes relatively simple and operational.
Regardless of whether the following two sentences are correct or not, whether they can withstand the rigorous test, but at the current stage, I am more limited, but I can firmly believe that the law of supply and demand determines the long-term price trend is unchanged, the human nature determines The law of short-term price movements has remained unchanged. With such a belief, it is equivalent to having a core world view and values that look at the futures market. From this, the corresponding methodologies can be derived, that is, looking for the profit model of futures trading under the guidance of this core viewpoint.
The market for a futures product is in a bull market or a bear market. It is determined by its spot supply and demand relationship. The supply market is in short supply. The bear market is the oversupply. If the spot of the futures product is a commodity, the understanding of supply and demand is compared. Easy, and if the spot of the futures product is a stock index or a stock, the relationship between supply and demand is actually the supply and demand of stock chips and money. If there is more supply of chips and less money to buy chips, the supply will be oversupplied and the stock will fall. Otherwise it will go up.
The bull market and the bear market, that is, the running direction of the market is determined by the relationship between supply and demand, and the five waves theory, three waves or how many waves in the bull market and the bear market, that is, the walking path of the market is determined by human characteristics. For example, what we call "The first drumming cheers them up, then second weakens, while third devitalized. " is a characteristic of human nature, so there will always be a "stop" for each trend market.
If we are careful enough to observe, understand, analyze, and identify, we will find that the mainstream people involved in the market are impulsive, follow-up, panic, when they are stuck, and when they want to take profits... the market will show corresponding Price fluctuations. Any thoughts and emotions of any participant in the market will be reflected in the fluctuations of the market, but when the mainstream people do not form the same or similar views or states, the market is usually disorderly, random, and oscillating. of. And in a certain time frame, the mainstream people's views or status tend to be the same, the market usually has a recognizable trend.
For all investors, understanding the macro fundamentals of supply and demand, such as monetary policy, industrial policies, etc., can be achieved; but to understand the fundamentals of the relationship between supply and demand, such as the acreage, growth, and alternatives of agricultural products. Situation, grower mood, etc., ordinary individual investors are difficult to achieve, only institutional investors and professional investors are relatively easy to achieve. Therefore, through fundamental research, the individual investors do not lose to institutional investors and professional investors, but through the short-term trend in fundamental research, individual investors are clearly at a disadvantage. The fundamental analysis of the relationship between supply and demand must be useful. As for the application of thick line analysis or the application of detailed analysis, it must be different from person to person. We should use our strengths instead of relying on our own shortcomings.
When the trader observes the market, if he believes that certain types of market fluctuations are not obvious, then these quotes can't be grasped for him. For him, he should actively "miss" these quotes; Other types of market volatility are obvious and identifiable, so he can seize these quotations. All he needs to do is wait for these types of quotations to appear, identify them, and capture them. Of course, because of the limited analysis of personal analysis, summarization, recognition, and the variability of the mainstream people involved in the market, even if a trader sees a sign of a market that he believes has obvious characteristics, it may be an “illusion”. And if you encounter the "illusion", you can have a coping strategy, that is, stop loss in time. This is the technical analysis and its application.
Technical analysis pays attention to "reenactment". In fact, the market is not repeating graphics, but human nature. The market sentiment consisting of the emotions of a living person must be regular, because human nature is unchanging, and human nature is lawful. It's just that market sentiment is made up of thousands of participants with different emotions, which are more complicated and more difficult to identify than individual emotions. But no matter what, when the sentiment of the mainstream groups participating in the market tends to be at the same time, market sentiment is easy to identify. I think this is the essence of technical analysis.