From a loss of 14 million to A9 trader Depth practical sharing: "Trial trading, bottom position, locking orders, increasing positions, closing positions" trading strategy full analysis!

Any trading strategy is built on a certain basis of market analysis, which is consistent with your analysis method.

The so-called market feeling and intuition cannot serve as guidance and basis for trading.

Trading strategies must be combined with analytical methods; trading strategies that are detached from analytical methods lack practical significance.

Many skilled traders exclude bottom-fishing and top-picking from their trading strategies as profound lessons of failure, but for me, bottom-fishing and top-picking are fundamental and crucial.

Since my analysis method focuses on identifying market turning points, my trading strategy is very different from trend-following strategies.

The steps may be the same, but the connotation is different.

My trading strategy consists of several steps: trial trading, base position, locking orders, increasing positions, and closing positions.

🚩01, Trial Trading Strategy

The trial trading strategy is an opening strategy adopted when there is a possibility that a turning point in the market appears earlier than our predictions. The position is very light, with the opening funds controlled at less than 10%, generally only 5%.

In our analysis method, trend reversal points are generally unequivocal and usually occur as predicted.

However, sometimes due to a turning point in a certain market, its position appears beyond our expectations, and we cannot determine whether its turning level has already increased. In other words, the major trend reversal may occur earlier than our predictions.

Due to the inability to completely determine it as a turning point in the trend, a trial trading strategy is adopted, using the extreme price of this turning point as the stop-loss level.

Stop-loss is not a trading strategy, but a trading principle that runs throughout the entire trading process.

No matter how confident we are in our analytical methods, it does not guarantee that we can maintain an objective and calm mindset at every moment.

When we make mistakes, we use stop-loss to correct them. Only stop-loss can prevent a mindset of taking chances.

Since it is a trial position, be ready to exit at any time.

Escaping the warehouse is an important precautionary measure in trial trading strategies.

There are two types of exit strategies: one is stop-loss, and the other is take-profit.

Since the trial position is not opened at a clear turning point in the market, it is necessary to confirm the market turning at the next turning point. If this turning point does not reinforce the market turning but rather strengthens the previous trend, then profit-taking measures should be taken.

The purpose of trial trading is not to make a profit, but rather to stabilize one's mindset. Regardless of whether the trial trading is successful or not, it helps to alleviate the anxiety of gains and losses.

Sometimes, losing an important opportunity is more painful than making a mistake.

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🚩02, Base Warehouse Strategy

The bottom warehouse strategy is an undercover or top-cover operation strategy carried out during a major trend reversal.
The opening position funds are above 10%,
Generally controlled at around 20%,
Use the extreme price at the turning point as the stop-loss level.

Trial trading and bottom warehouse are both opening operations, but the differences are significant. There are mainly four points of difference:

The judgment of the shift in trend differs. Trial trading is based on probability assessment, while the bottom position is based on certainty assessment.

Different mindsets. Although trial trading has the possibility of becoming a base position, one must always be ready to exit. The base position also emphasizes stop-loss, but stop-loss is merely a precautionary measure. No matter how the market changes, one should never take profits.

Different positions. The trial position is light, while the base position is heavy. The base position is 4 times that of the trial position.

Different purposes. Test trading focuses on stabilizing the mindset, while the core position aims for profit. The core position plays a crucial role and serves as the foundation and confidence for subsequent operations.

The bottom warehouse operation generally implements a phased market entry strategy in the trend reversal area.

Generally speaking, it is not common for a V-shaped reversal pattern to appear in a single day during a major trend reversal; most of the time, there will be a buildup process, either large or small. Sometimes this process can be quite long and dull.

The bottom warehouse operation has a heavier position, and if invested all at once, the psychological burden of enduring this long process is relatively heavy.

Therefore, it is generally completed in three stages.

The first time entering on the turning day, the capital is 50% of the base amount.

Entering the second time at the reversal point, the capital is 25% of the base position.

The third time entering the trend reversal shape breakthrough day, with funds being 25% of the remaining base position.

If a single-day V-shaped reversal pattern appears, the bottom position is only the amount of capital invested on the turning day for the first time, which is 10% of the total funds, and no further increase in the bottom position will be made.

Although the base position volume does not meet the planned target, the subsequent position layout has also been reduced accordingly, but this is a principle that must be followed. Therefore, I do not like V-shaped reversals. Although V-shaped reversals can make money quickly, they tend to make less money.

Some trend reversal areas do not run for a long time, and the smaller the level, the shorter the running time. However, some super trends, especially major bull bottoms, have very long running times in the trend reversal areas.

Therefore, during the process of holding the bottom order, one must have the mindset of persisting to the end. Once the stop-loss level is set, regardless of the winds from any direction, I remain steadfast and unmoved. The "immovable as a mountain" principle of the wine-field strategy is the mental approach to be applied in such a state.

If short-term trading is like a blitzkrieg, seizing the best moment to strike decisively and retreat immediately, then long-term trading is akin to a protracted war, a long-term struggle of strategy, courage, confidence, and will.

Especially during the bottom warehouse stage, due to the lack of floating profit protection, there is only the stop-loss price as a psychological defense line. Without the determination to "hold the fortress firmly", it is difficult to achieve great success.

Many trend-following trading strategies use breakout points as the base opening point for positions. On one hand, this is to wait for trend confirmation, and on the other hand, it is to avoid the arduous and excellent process of "holding a strong fortress."

This is also where the drawbacks of undercover and伏顶 lie.
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🚩03. Lockup Strategy

In my opinion, there are two types of locking.
One is active locking of funds,
The second is passive lock-up.

Passive Lock-up: This occurs when a trader makes a mistake in the direction of their trade and is forced to perform a lock-up operation to prevent further losses.

Active Lock-up: Conversely, this refers to the locking operation carried out to secure profits based on the judgment that the market will experience a secondary counter-directional movement.

Unlocking is a challenge for passive locking. Opting for passive locking operations instead of stop-loss operations indicates uncertainty about the future market trends or a hopeful mindset.

Stop loss is like a quick cut to untangle the mess, allowing one to start anew; whereas passive locking of positions carries a psychological burden, intensifying the mentality of gain and loss.

Therefore, the best strategy is to cut losses rather than lock in profits; even if you cut incorrectly, you should still cut. Our lock-up operation is an active lock-up. The reason for adopting an active lock-up strategy instead of a profit-taking strategy is that the lock-up strategy has more advantages:

I have preserved my bottom position, which gives me a psychological advantage.

A position with unrealized gains generally won't be easily closed. When adding to a position, the unrealized gains from the original position also serve as psychological support.

Accumulated positions have advantages, and locking positions creates greater profit potential.

Re-entering the market after closing positions is treated as opening a new order. The position size of the new order must strictly adhere to risk control regulations, and the opening capital cannot exceed a certain proportion.

After the lock-up operation is completed, since the underlying position is still there, additional leverage can be applied, and the proportion of funds occupied can be gradually increased.

The distance in warehouse volume between the two will continue to widen; even if the closing strategy includes multiple reverse operations to generate profit, it will ultimately be inferior to the locking operation. The longer the trend persists, the greater the profit gap between the two.

Of course, if you have an extremely strong mindset and self-control, you can also achieve a position size for new orders after closing positions that reaches the accumulated position size after locking in positions. However, this kind of operation tramples on risk control rules, and the more successful it is, the more it will foster the expansion of greed.

A single act of luck in committing a foul will lead to multiple acts of luck in committing fouls, ultimately digging oneself deeper. In the risk market, trampling on the rules is equivalent to digging one’s own grave.

The lock-up strategy has two purposes.

Not aimed at making a profit, but to avoid the emotional fluctuations caused by the volatility in the market.

Maximize profits by segmenting long-term operations.

It is relatively easier to achieve the first goal. There is no need to worry about the position of the lock-up; just lock in the profits until you determine that the oscillation has ended and then unlock.

Achieving the second objective is not so easy. First, it is necessary to determine the two limit positions of the oscillation box, and then carry out locking, unlocking, or even increasing the position near these two limit positions.

This places higher demands on your analytical methods.

Sometimes, the money earned from locking positions can exceed the profits from trends, but if there are no trend profits (unrealized gains from the base position) as a safeguard, it is very difficult for the locking operation to succeed. Therefore, holding onto the base position, no matter how arduous it is, is worth it.

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🚩04. Add-on Strategy

If you do not know the harm of increasing your position, then you do not know the benefit of increasing your position either! From a certain perspective, increasing your position is more difficult to operate than the base position.

For our analysis method, the difficulty of bottom position operations lies not in judging the turning point of the market trend, but in the process of holding firm after entering the market. The difficulty of increasing positions lies in grasping the timing for adding positions.

Sometimes, trends run in twists and turns, and if the position is added improperly, one can find themselves passively caught in the rapid fluctuations of hitting the upper limit today and hitting the lower limit tomorrow, even having all the unrealized gains of the bottom position swallowed up, turning into unrealized losses.

Sometimes, the trend moves swiftly and powerfully, creating a momentum that makes one miss good opportunities while waiting for the right entry position.

Therefore, the rhythm of the trend's movement is very important for increasing positions.

There are two methods for increasing the stake: one is the point method, and the other is the pattern method. Each has its own merits.

Point method: Add a code based on how many points the trend rises or falls. The points are fixed. Different varieties have different fixed points.

The advantage is that it is beneficial for grasping the momentum of rapid movement. The disadvantage is that one must have an unwavering stable mindset when facing fluctuations in a trend that has ups and downs.

Pattern Method: It is a strategy that adds positions based on the market patterns that run with the trend. The trend is composed of secondary boxes. The pattern method generally adds positions once at the top and once at the bottom of the oscillating box.

In an uptrend, after identifying the range, first add to the position at the bottom of the range, and then add to the position again when the top of the range is broken. In a downtrend, after identifying the range, first add to the position at the top of the range, and then add to the position again when the bottom of the range is broken.

The advantage of the morphological method is that the position for adding leverage is relatively good, making it easy to stop losses. The downside is that it is difficult to grasp the trend of rapid movements.

The additional amounts for the two methods are consistent and arranged in a pyramid layout, with the base amount as the bottom of the pyramid, decreasing sequentially according to the 0.618 golden ratio.

Our scaling strategy adopts the pattern method. However, to better grasp the rapidly moving trends, the primary task after determining the major trend reversal is to analyze the trend movement patterns and develop the scaling strategy based on those patterns.

Whether it is a rapidly moving trend or a trend with ups and downs, its occurrence, development, and conclusion all operate according to a certain market rhythm, with important top and bottom turning points generally falling on the rhythm points.

Whether it's locking up or increasing positions, the market pattern is just one of the criteria for judgment. However, to find a better entry and exit point, it is essential to operate in conjunction with the rhythm points.

The beat point is the most critical basis for judgment. The beat point is the most important support and resistance level in the market.

In an upward trend: if the beat point is at the bottom, it will become the driving force for the trend to advance; if at the top, it will become the resistance for the trend to advance.

In a downtrend: the support and resistance effects of the bottom and top beat points are exactly opposite to the trend. Under the observation of the beat points, the false breakout of the market pattern will be revealed.

Therefore, the stop-loss operation after increasing the position is generally determined not by market patterns but by market beats. The limit price at the beat point is the stop-loss level.
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🚩05. Closing Strategy

In fact, the closing strategy is not important for our analysis method.

Before a trading cycle unfolds, we have a rough grasp of the overall trend based on our analysis of the long-term market. As the trend runs its course, it will become increasingly clear when the major trend will eventually reverse.

Therefore, closing a position is just the natural ending of a play.

Every trend, from start to finish, goes through a process of buildup, breakthrough, consolidation, sprinting, and eventual decline. However, sometimes, the decline does not occur before a major trend reversal, but rather after it.

To determine whether a trend has ended, the key lies in the market rhythm of the trend. When a market rhythm is completed, a major trend reversal is naturally approaching.

Therefore, closing positions is not in the strategy, but in the analysis.

If analysis is the swordsmanship, then strategy is the mindset. The unity of sword and Zen is not only about your mind but also about your sword. What kind of swordsmanship can match what kind of mindset, rather than having a mindset first and then matching it with swordsmanship.

These trading strategies are only made for one's own swordsmanship and appear rather rough; they still need to be refined through the tempering of practical experience.
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🚩06. Finally

Yue Fei once said: The brilliance of application lies within one's heart. Strategy is dead, just like military tactics; they are merely a set of basic rules and frameworks. The effectiveness of their application depends on your level of understanding.

There are perspectives of looking up at the market situation, looking straight at it, and looking down on it.

If you can achieve a state of overlooking, transcending beyond market fluctuations, what else cannot become your weapon?

Let's encourage each other!