Explaining stock trend trading using the principles of Chinese chess.

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1. Judging the timing and situation, layout comes first (trend determination and preparation)

Principle of Chinese Chess: The opening emphasizes layout, not rushing to attack, requires judging the timing and situation, and seeing the overall situation clearly.

Applied in trend trading:

1. Opening analysis: First observe whether the overall trend of the market (Large Cap, Sector) is in an upward trend.


2. Layout strategy: Use the 200-day moving average or 60-day moving average to determine whether a stock is in a bullish trend (crossing above the moving average indicates a bullish trend).


3. Operation:

In a good time for Large Cap, select sectors and individual stocks, and wait for the appropriate entry signal.

The moving averages show a bullish pattern (short-term moving average above the long-term moving average), starting to build positions in batches when the stock price breaks out.






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2. The coordinated functions of Chariot and Cannon with clear division of labor (building positions in batches and position management).

Principle of chess: Chariot for attack, flexible Horse, Cannon for long-range attack, each with distinct roles, coordinating in combat.

Applied in trend trading:

1. Main funding (Chariot): After trend confirmation, Block Orders enter the market in batches (core positions).


2. Mobile funds (Horse): Deal with market corrections, additional opportunities to increase positions, operate flexibly.


3. Long-range observation (cannon): Determine the larger trend through multi-period analysis (such as daily and weekly charts) to avoid local misjudgments.


4. Execution:

When initially establishing a position, use 25% of the capital, and add more after confirming a valid breakthrough.

During a short-term pullback to a critical support level, use 20%-30% of available funds to buy more at a lower price.

Keep the position size between 50%-70% and reserve a portion of funds to deal with sudden market changes.






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3. Plan first, then act, proceed step by step (entry points and strategy execution).

Principle of chess: Every move should be planned to ensure each move is stable and has subsequent responses.

Used in trend trading:

1. Entry Point: Wait for the breakthrough of key resistance or enter when the stock price rebounds at the support level to stop the fall.


2. Conservative Strategy: Before the trend breaks, hold stocks and follow the market; when the trend weakens, immediately reduce positions to take profit or stop loss.


3. Operation:

Breakout Trading: When the stock price breaks through the previous high with large volume, intervene when the trend accelerates.

Pullback Trading: The stock price retraces to the 20-day moving average or does not break the trend support level, enter after confirming the rebound.

Setting Stop Loss: Set initial stop loss at 6%, profit-taking target is 20%-30%.






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4. In the Middle Cap sector, be flexible and adaptable (adding positions with the trend and risk control).

Chess Principle: In the middle game, adjust the layout of the pieces according to the changing situation, combining offense and defense, and flexibly managing.

Applied in trend trading:

1. Adding positions with the trend: When the stock price breaks through the key resistance level and volume increases, the trend further accelerates, moderate additional positions can be considered.


2. Risk control: Always observe the trading volume and moving average status. If the stock price falls below the key support (such as the 60-day moving average), reduce positions or exit in a timely manner.


3. Operation:

When confirming the second breakthrough or strong rebound, add positions to 70%-80%.

When there is divergence between volume and price or the stock price falls below the trendlines, execute reduction of positions or stop loss.






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5. Abandoning pieces to protect the general, knowing when to advance or retreat (taking profit and stop loss, as well as risk management).

Principle of chess: When the situation is unfavorable, promptly abandon weak pieces to preserve the overall situation, avoiding bigger losses.

Applied in trend trading:

1. Stop loss: The core of trend trading lies in controlling losses, ensuring that losses are within an acceptable range.


2. Take profit: Gradually realize profits when reaching the target price, not greedily chasing higher points, protecting profits.


3. Operation:

Stop-loss principle: Resolutely stop loss when the stock price falls below key support levels (such as the 20-day moving average, 60-day moving average).

Take profit strategy: Take partial profits when the profit reaches 20%-30%, or sell when there is a volume surge at high levels.

Prevent 'all in, all out': Do not stubbornly hold onto losing stocks, strictly adhere to trading discipline.






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6. Be patient and act when necessary (waiting with patience)

Chess principle: Skilled players choose to observe opponents during the game, waiting for the best opportunity to strike.

Applied in trend trading:

1. Do not blindly chase highs: Although the trend is strong, the risk increases significantly after excessive rise, wait for a pullback opportunity.


2. Wait for confirmation: When the market direction is not clear, choose to wait and observe rather than blindly enter.


3. Operation:

Confirm that the stock price and volume are in sync, re-enter after breaking through the resistance level.

During market fluctuations, determine trend continuation or reversal by observing the 20-day moving average and 60-day moving average.






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7. In the face of battle, have a balance between offense and defense (comprehensive closure and profit protection).

Principle of chess: Approaching the endgame, maintain a steady offense and defend existing advantages, avoiding failure at the last moment.

Applied in trend trading:

1. Exit in batches: When profit reaches the target, gradually exit the market to ensure the profit is in hand.


2. Dynamic profit-taking: After the stock price has risen significantly, set a moving profit-taking line to protect profits along with the trend.


3. Operation:

After the stock price rises, when the short-term moving average (such as the 20-day moving average) is breached, reduce positions to preserve profits.

Use the 60-day moving average as the final exit signal, sell off completely when breached.




Explaining stock trend trading using principles of Chinese chess.

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Summary: The common way between chess and trend trading.

Layout: Before confirming the trend, patiently wait for opportunities and scientifically allocate funds.

Adaptation: In the developing trend, flexibly increase positions and adjust holdings.

Risk Management: When the trend weakens, decisively cut losses or reduce positions to protect capital safety.

Execution: Strictly adhere to trading strategies and discipline, unaffected by market sentiment.


Integrate the overall view, strategy, and execution of chess into stock trend trading, achieving steady profitability with the motto "Plan first, then act. When you act, you're certain to win."