Hey girlies! I’ve been getting a lot of questions lately about macro and micro trends. Why do they say the “macro trend dictates the micro moves”? It’s confusing! Today, let’s break it down! I promise, after reading this, everything will become clear and your trading skills will skyrocket! 🚀
First, let’s talk about what macro and micro trends are. Simply put:
- Macro Trend: Like a history book, it records the price movement over a long period. Think weekly, monthly, or even yearly charts. It reflects the long-term trend.
- Micro Trend: Like today’s newspaper, it reflects recent price fluctuations. Think 15-minute, 1-hour, or 4-hour charts. It reflects short-term market sentiment.
Okay, here comes the important part! Why do they say “macro trend dictates the micro moves”? It’s like… it’s like… (Let me think! 🤔)
It’s like sailing the ocean – the overall direction determines the small waves! 🌊
- Overall Direction (Macro Trend): The overall flow of the ocean, such as from Asia to the Americas. This big direction hasn’t changed for centuries.
- Small Waves (Micro Trend): The small waves on the surface of the sea, which may move east today and west tomorrow.
But! No matter how much the small waves toss and turn, they can’t escape the overall flow of the ocean! Ultimately, they have to follow the ocean and head towards the Americas!
Trading is the same!
1. Macro Trend Sets the Direction – Like a Compass! 🧭
The macro trend (like the weekly chart) tells you whether a stock/currency/commodity is going up or down in the long term. This long-term trend is like a compass, pointing you in the right direction for your trades.
If you see an upward trend on the weekly chart, then even if the daily chart shows a decline, it’s only a temporary pullback. You should buy the dips and follow the macro trend!
My Hard-Earned Lesson:
I didn’t understand this before. I only looked at the 15-minute chart and chased the highs and cut the losses, getting beat up badly by the market! 😭 Later, I started looking at the weekly chart and realized that I was often trading against the macro trend! I was a master at losing money! 🤯
2. Macro Trend Provides Support/Resistance Levels – Like Ceilings and Floors! 🧱
The support and resistance levels formed by the macro trend are super important! They act like ceilings and floors, limiting price fluctuations.
- Support Level: When the price falls to this level, it’s like hitting the floor, making it difficult to break through.
- Resistance Level: When the price rises to this level, it’s like hitting the ceiling, making it difficult to break through.
If you see strong resistance on the weekly chart, then even if the daily chart shows an upward trend, be careful, as it’s likely to turn downwards when it hits the resistance level!
My Exclusive Tip:
I mark out the important support and resistance levels on the weekly chart, and then focus on these levels on the daily chart. If the daily chart shows reversal signals at these levels, I’ll take action decisively! 🎯 The accuracy is super high!
3. Macro Trend Filters Out Noise – Keeping You Calm! 🧘♀️
Micro trend fluctuations are too frequent, making it easy to get impulsive. It goes up and down, making you nervous and tempting you to trade erratically.
But! The macro trend can help you filter out this noise. It helps you see the essence of the market and avoid being misled by short-term fluctuations.
My Personal Experience:
I used to watch the market for 12 hours a day, highly stressed, wanting to trade with every little fluctuation. As a result, the more I traded, the more I lost! Later, I started looking at the weekly chart and realized that many daily fluctuations were just noise. This allowed me to be much more спокойный (calm) and reduce unnecessary trades.
To summarize:
- Macro Trend Sets the Direction, Micro Trend Finds Entry Points.
- Pay Attention to the Support/Resistance Levels of the Macro Trend to Increase Trading Success.
- Use the Macro Trend to Filter Out Noise, Stay Calm, and Avoid Impulsive Trading.
Girlies, I hope this post helps you! Remember, trading is not gambling. Analyze rationally and follow the trend! 💪
Wishing you all financial freedom soon! 💰