# Chan Theory Small Capital Three Pattern Trading System

## Pattern Overview

- Pattern One, Two: Follow Small Trend (30 minutes), light position short trades, pursue certainty;

- Pattern Three: Follow Big Trend (4 hours), heavy position main attack.

## Pattern One: Follow Big Trend, Small Structure Entry (20% Capital)

- 4-hour defines the trend, only perform trend-following operations on 30 minutes;

- Do not buy against the trend initially, prioritize second buy and third buy;

- High win rate points in small timeframes, take small segments, quick in and out;

- Take divergence rebounds, gradually take profit without greed.

## Pattern Two: Pen Central Departure and Pullback Confirmation (20% Capital)

- Only perform the first confirmation after a breakout, do not get entangled within the central zone;

- 30-minute central zone consists of 3-5 strokes;

- Clearly leave, wait for the pullback to show structure before entering;

- Set stop loss at the lower edge of the central zone or the low of the pullback stroke;

- Combine volume-price and SAR for judgment;

- If no pullback, observe if the second stroke makes a new high strongly before deciding whether to chase.

## Pattern Three: 4-Hour Third Buy Heavy Entry (80% Capital)

- 4-hour level divergence or third buy determines the main trend;

- Find precise entry on 30 minutes (second buy, third buy);

- Confirm support during pullbacks before entering, hold for the medium to long term.

## Operation Logic

- Pattern One: Trend judgment using EMA/SAR or double 30-minute central zones; wait for false breakouts or true breakouts within the central zone;

- Pattern Two: Focus only on breakout/breakdown of pen central zones, high win rate with trend resonance;

- Pattern Three: Use 4-hour to identify trends, use 30-minute to enter.

## Pullback End Judgment

- Key price level breakout confirmation: pullback high (long)/low (short);

- Auxiliary signals: small double bottom/central zone, small timeframe SAR reversal, expansion, candlestick reversal, engulfing, MACD divergence, breakout resistance;

- During 30-minute operations, can look at 5-minute structural details.

## Position and Capital Management

- Pattern Three 80%, Pattern One/Two each 10%-25%;

- Divide into 5 positions, each position can lose 5-10% of capital;

- After profit, still divide into 5 positions for rolling;

- Profit-loss ratio at least 3:1, small capital relies on position division and compound rolling to grow.

## Exit Strategy

- Pattern One/Two: Exit if the structure of 9 cycles is not completed; set stop loss at the top of the central zone or the bottom of the pullback, offset 100-200 points to prevent spike;

- Set breakeven at 1000 points profit, start reducing positions at 2000 points;

- Pattern Three: If it falls back to the previous central zone, consider it a failure, take profit as the trend ends.

## Response to Breakout Without Pullback

- Second stroke new high strong: large body, sufficient volume, no divergence → can chase;

- If in a sideways range: wait and see $BTC .