Don't Panic if Your Long Position is Stuck! EMA Moving Average Three-Step Averaging Strategy

Have you accidentally gotten stuck in a long position during trading? By leveraging the EMA moving average system and mastering the scientific timing for averaging down, you might turn a crisis into safety. Based on the relationship between the price and the EMA 5, 10, and 30-day lines, we can categorize the averaging scenarios into three types:

Scenario 1: Bullish Arrangement

When the price is above the EMA 5-day line and the 5-day line successively crosses above the 10-day and 30-day lines forming a bullish arrangement: If the stuck percentage is within 3%, you can patiently wait for the price to retrace to the 5-day line; as long as it does not break, there is a natural opportunity to get unstuck or even profit; if stuck exceeds 3%, it is recommended to decisively average down at the 5-day line price to quickly lower the holding cost and increase the probability of getting unstuck.

Scenario 2: Fluctuation Correction Stage

When the price is fluctuating between the EMA 5-day line and the 10-day line, and the 5-day line remains above the 10-day line: If it breaks below the 5-day line and a stop loss is not promptly set, you can average down when the price retraces to the 10-day line support level, controlling the cost below the 5-day line, and hold on until the price rebounds and breaks through the 5-day line; if the price further breaks below the 10-day line, you can use a staggered averaging strategy when the stock price deviates 5%-10% from the 10-day line, prioritizing selling averaged down shares to lock in profits when the price rebounds to the 10-day line.

Scenario 3: Early Bearish Trend

When the price breaks below the EMA 10-day line, and the 5-day line and 10-day line form a dead cross or are about to form one: It is recommended to patiently wait for the price to retrace to the 30-day line (commonly known as the 'lifeline') to average down, lowering the cost below the 10-day line. Once the price effectively breaks through the 10-day line resistance, and the 5-day line re-gold crosses the 10-day line, you can continue to hold and observe, seizing the opportunity for a trend reversal.

It is particularly important to note that the averaging down strategy should be flexibly applied in conjunction with the overall market trend and risk tolerance, with strict stop-loss settings to avoid falling into the trap of averaging down and getting stuck deeper. If needed, Li Ao is available for online answers.