Essential Steps of a Trading System to Unlock Wealth

The key to trading profit is to cut losses when wrong and let profits run when right, achieving small losses and big gains. It is specifically divided into five steps:

1. Follow the Trend

Use simple moving averages to distinguish between bullish and bearish. Buy when the price is above the moving average and sell when it is below, closely following the market's major trend.

2. Open a Trial Position

Go with the trend, following the major trend while countering the minor trend. When selecting an entry point, focus on the potential risk-reward ratio, entering at the bottom or early stage of the trend, cutting losses small when wrong and gaining large when right.

3. Strict Stop Loss

If a key level is broken, you must cut losses; do not entertain false hopes or average down your losses. If the price returns to the ideal range, you can enter again.

4. Adding to Winning Positions

This is the core of making big money. After a price rise, when it retraces, add to your position at the support level or just before breaking the previous high, following the major trend while countering the minor trend. After adding to the position, move your stop loss point; if it fails, cut losses on the added position and wait for the next opportunity; if it continues to rise, hold the position and add again on the next pullback, moving the stop loss until a stop loss is triggered or a head signal appears to take profit.

5. Reasonable Profit Taking

Do not easily take profits; exiting can be done in batches or all at once, waiting for high-probability head signals. Right-side trading requires acceptance of floating profit pullbacks; do not chase selling at the highest point.

Master these principles and strictly adhere to the discipline, and profits will naturally follow.