Observe market trends using the envelope to gauge medium- to long-term movements and keep probing to discover the market's trajectory
Where market equilibrium breaks down
Pullback after trend-following breakout
Range breakout
Trend wedge-type breakout
Range breakout
Fast-tracking trend following
All events occur on 30-minute charts
Although anti-trend looks like it could win
market sentiment always changes over time
What seems like anti-trend would win only because you’re looking at later market moves
In reality you must be aiming for the trend to enter
The market moves over the long term, but it is not reflected in candlestick charts
Long-term chart frames often create inconsistencies
In reality, entering by looking at short-term charts within a long-term view is what triggers trades
Anti-trend is merely anti-trend trading, so
It’s better to incorporate trend-following analysis and a breakout/breakback approach
Anti-trend alone looks like a situation where averaging down could seem successful
But it’s just a late-stage market where anti-trend rebounds appear to work, making it look like you could win
In reality, it’s safest to enter at the point of a rebound followed by trend-following
Otherwise you’ll be trapped in a perpetual series of false signals and won’t know what to base entries on
Based on the long-term market
Movements on shorter timeframes are reflected in the long-term market, so
Long-term market trends are not completely independent of short-term movements
They only appear in the short term
Stop loss
In a trending strategy, drawdowns tend to be larger
Anti-trend moves tend to favor profits, but when it goes against you, losses accumulate
In either case you’re just moving toward a trend-following approach
If you follow a trend, the number of losses will almost certainly increase
Unless you use stop-loss trading with trend-following, you cannot increase your gains
A trend only requires the breakout range
Anything else is unnecessary
If the trend continues
It would mean breaking through the long-term timeframe, which is the point
There’s only a conceptual range for take-profit placement rather than a fixed width
Because beginners tend to enter incorrectly when trading on short or mid-term timeframes
Even without an envelope at the extremes of the price range
You can identify the trend on a short-term view
Manual stop loss
Nampan trading = short- to mid-term perspective
Stop loss
In conclusion, adopt a long-term perspective
Trend confirmation on 30-minute to 1-hour charts
If you trade with an automated system as-is, profits won’t increase
Automated trading assumes market structure and direction are absolute
In reality, trades are driven by mean-reversion theory
Driven by mean reversion and prospect theory
Therefore market observation becomes powerful
Envelope or MA touch, followed by subsequent breakout
That’s all
Beyond that, the short-term envelope line can set up a similar entry as the subsequent breakout
Market patterns and envelopes form a relationship
In ranges, price bounces off the inner envelope bands
In trends, price bounces off the outer envelope bands
Bouncing off the outer band is a trend, while in the short term it’s at MA touch
Also, MA touch can be comparable to a trend change
From a trend perspective, trades are effective when trading off the outer envelope band
Moreover, the width of that band is unclear and represents a proper relationship
Distance from MA merely indicates the market pattern
Envelopes are basically for trend-following and should be entered with a trend perspective
Do not treat envelopes as anti-trend or mean-reversion tools
They are used within a trend context
They are used according to market patterns
Envelopes require only near-band and far-band levels along with MA-like bands
To keep focus on the trend, it's enough to add the envelope close to the trend with a color
Fundamentally, only two envelopes are relevant; others are outside the scope of consideration
Markets simply trade according to market conditions, so generally only one envelope is needed
The farther band is just a tool indicating profit-taking and not an entry tool
As an entry tool, you only need one closer band width
If you want to indicate a trend, you can color the band that is even closer
There isn’t a big difference between MA touch and an envelope touch
If a trend emerges, it’s timing-wise better to enter immediately
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