A chart teaches you the most complete trading logic:
1. Trend and Direction: First identify the trend, categorizing it into three types: upward, downward, and sideways. Different trends have corresponding pattern representations, such as the upward trend's "first long, then short"; then determine the direction, clarifying the main bullish, main bearish, main sideways, as well as the situations of trend extension or reversal to set the tone for trading.
2. Position and Signal: Find positions that are in line with or against the trend, each having characteristics of reversal and continuation, which are crucial for selecting entry points; observe signals for weak and strong signals, distinguishing between stop-loss / stagnation, divergence, etc., to assist in judging entry timing and filtering false signals.
3. Risk Control and Position Size: Set stop-loss on the left and right sides, with the left side predicting highs and lows in advance, and the right side combining with candlestick signals to control losses; determine position size based on "risk-based quantity," calculated through total risk, single trade risk, etc., matching capital with risk tolerance.
4. Trade Execution: Look for space requirements of at least a 2:1 risk-reward ratio, filtering opportunities with sufficient profit potential; open positions on the left and right sides, corresponding to phased entry and adding positions based on signals; closing positions includes initial stop-loss and holding, with the initial stop-loss setting the exit point, and holding based on conditions like risk-reward ratio and patterns to decide whether to hold or take profit.
5. Adding Positions and Optimization: Follow the principle of "do not add positions while floating in profit, only add when meeting the buying point," to avoid blindly increasing positions that expand risk; the entire process covers all aspects of trading, from trend identification to dynamic position adjustments, forming a closed loop to help traders systematically plan trades, improving win rates and risk control capabilities, but actual application needs to be flexibly adjusted according to the market, adapting to different varieties and conditions.
