This article will carefully explain a trading system that I commonly use, the Trend 228 trading, which is very suitable for medium to long-term market movements. If you find my content helpful, liking and sharing is the greatest support for me!
🔸What exactly is Trend 228 trading?
Trend 228 is used for trading when the market reverses from a downtrend to an uptrend. It is not the rolling position trading that you may be familiar with. Next, I will explain this to you in detail:
Trend 2-2-8 can also be understood as Trend 3-3-12 or 1-1-4. The numbers represent the percentage of total capital for each position, that is, the proportion of each opening and adding to the position.
This trading method can be used not only for daily trades but also when trades are in loss. Everyone can look at the fourth quarter of 2024; there were times when live trading calls resulted in losing trades, and I used this method to guide everyone out of those situations. "Click here to see how to break even after being stuck in a trade"
🔸Next, I will use illustrations to teach you how to apply Trend 228 in daily operations:
Assuming you believe that the current price of 2590 in the ETH uptrend is about to reverse and decline, you can open a position with 2% of your capital. To put it simply, if you only have 100 units, just invest 2 units.
This is the first relatively good scenario. You opened a position just as the market started to decline, proving that your foundational knowledge is strong and your sense of direction is keen. You successfully caught the peak of this round of the market and can choose to reduce your position. I will explain how to find take-profit levels in the next article.
What should you do if the market continues to rise after you open a position? Look at the image below:
In a situation like this, after you open a position, the market continues to rise toward the next resistance level at 2670, resulting in a 90-point drawdown. At this time, you should add to your position again, investing another 2 units. Your current average opening price will then be 2635. If the price drops back to the opening level, be sure to reduce your position to avoid further upward moves without a defense strategy.
When trading, we should always consider the worst-case scenario. If after adding to your position at 2670 there are no signs of a pullback and it directly rallies, what should we do?
The resistance level after 2680 is at 2720. At this point, it's your last line of defense and the final opportunity to add to your position. Your position is currently down by 85 points, and for this last addition, if you invest 8 units, your average opening price will be close to 2700, leaving only a 20-point drawdown from the current price.
From opening a position at 2580 to a rise of about 140 points to 2720, you only used 10% of your position to adjust the average opening price to 2700. In a counter-trend market, if you want to find reversal points and catch the peak while fearing to miss out, then this operational method is your best choice. Compared to entering with a heavy position, this might be more stable.
Trend 228 trading, the larger the cycle, the higher the win rate. The chart above is just for convenient display.
🔸At this point, someone will definitely ask: Why not just wait until 2700 for the first opening?
If you are foolish and do not realize it, when at 2580 you can feel the rise to 2700, then I want to ask you why you are bullish? It's a simple principle: in trading, you cannot be 100% sure the market will rise or fall. We can only respond to the market through our operational techniques, rather than relying on mere talk.
Trend trading, before this, is all counter-trend trading!
No one can short at the highest point, nor can anyone go long at the lowest point. We can only short or long at relatively high or low positions.
This is the entirety of the content. If you find what I said helpful, you can like and support me, and I will release videos for detailed explanations later.