The breakthrough trading strategy is suitable for the situation where the trend of the spot silver price suddenly moves up or down after the adjustment platform is established. The so-called platform is a rectangular shape like a box, that is, the silver price fluctuates up and down between two horizontal straight lines, neither going up nor down, and has been sorting horizontally within the rectangle. This form usually appears in the adjustment stage of the unilateral trend market. At this time, the long and short sides are evenly matched, and they are caught in a tug-of-war.
In the spot silver market, the time for platform consolidation is usually not short, but there will always be a breakthrough. If investors want to make a breakthrough transaction, once the silver price breaks through the upper track, it will constitute a buy signal; if it falls below the lower track, it will be a sell signal. Generally speaking, no matter whether the stock price breaks up or down, the surge in trading volume can be regarded as one of the important signals of the breakthrough.
After a breakthrough signal, investors can use the following two entry methods:
1. Enter the market after the first breakthrough or the first breakthrough withdrawal
After the silver price breaks through the platform/box, there is a 40% probability that it will pull back to the upper and lower rails to test whether the breakthrough is successful, and there may even be one or even several false breakthroughs. Therefore, the risk of entering the market after the first breakthrough or withdrawal after the first breakthrough will be relatively large. With this entry method, the stop loss for an upward breakthrough can be set at a position lower than the lower track, and the stop loss for a downward breakthrough can be set at a position higher than the upper track.
2. Enter the market after the price breaks through the second platform
The way to enter the market is to continue to wait and see after the silver price breaks through the first platform, not to enter the market, and only enter the market when the price breaks through the second platform along the trend. If the silver price can still develop to the fourth platform along the trend, we must be vigilant at this time, and it is best to take profits as the main point.
Finally, I would like to remind everyone that when using a breakthrough trading strategy, in addition to paying attention to the K-line with a relatively large entity at the time of the breakthrough, you can also combine technical analysis tools such as moving averages and Bollinger bands, which will help you enter and exit the market more accurately and increase the probability of winning.