[Red Envelope] Everyone says there's no main trend and the rotation is fast, but the real main opportunity is here!

Hello everyone, I am the trend expert focused on leading stocks and trends, skilled at capturing logic. Logic never dies, and trends never end. [Taogu Ba]
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Everything I lose is not truly mine; everything I seek is bound by its constraints.**

On February 9th, I paid attention to Mingyang Electric Circuit. It broke down on Wednesday, so I reduced my focus. Today, there was no premium, and I expect some rebound after adjustment before considering unfollowing.

On February 11th, I followed Tianhai Defense but unfollowed on Tuesday.

On February 12th, I followed Continental Oil & Gas and unfollowed after it broke down on Wednesday.

On Tuesday, I watched Light Media with a limit-down, but it didn’t rebound, so I unfollowed at open on Wednesday.

On Wednesday, I paid attention to Guosheng Technology’s pullback and am currently holding.

On Wednesday, I followed Orient Sunshade’s pullback and am currently holding.

On Thursday, I focused on Cuiwei Shares, preparing for a stablecoin license opportunity.

On Thursday, I followed Nord Shares, as lithium carbonate prices rose.

In today’s market, even limit-ups are hard to hit, sector rotations are fast, and it’s not suitable for quick trades. A slower approach is better.

Trend valleys appear stronger, such as the previous four major tungsten companies: Jiang tungsten, Zhangyuan Tungsten, Xianglu Tungsten, and Zhongtung High-tech, which couldn’t hold on in the end—tears all around…

Missing opportunities is inevitable; just look to the future.

Trader’s Mental Cultivation

Overcoming fear and greed: When losing, fear prevents stopping loss; when winning, greed prevents taking profit. These are the eternal human shackles. Self-discipline and cold rules (like stop-loss discipline) are key to protecting traders from emotional slavery.

Shifting focus from profit and loss to process: Mature traders focus on whether they strictly follow their trading plans and rules, rather than just the outcome of individual trades. Profit is a natural result of correct processes, not a direct goal.

Trading is an inward practice: Ultimately, trading tests cognition, emotional management, and human nature. Maintaining inner calm and rationality amid market fluctuations is not only a path to success but also an understanding of life’s true essence.

Market styles are constantly changing.

The so-called trend-following is simply moving with the overall environment.

It’s not about blindly chasing big gains or valleys.

For example, recently, limit-ups couldn’t be hit, funds returned to trend valleys, and after breaks, there was a rebound and rise again.

The best choices are either waiting for low-entry opportunities or seeking adjustment opportunities within the trend.

What is trend-following trading?

Trend-following trading, as the name suggests, is a philosophy of trading in line with the current main trend of the market. Its core idea comes from basic technical analysis: “Once a trend is established, it tends to continue until clear reversal signals appear.”

Trend trading can be slow at times, but once it ignites, it’s very strong—like Mingyang and tungsten industry stocks.

The core points of trend are summarized as three:

1. Recognize the trend

First, determine whether the market (major index) or individual stocks are in an uptrend, downtrend, or sideways consolidation.

2. Follow the trend

In an uptrend, only go long (buy or hold); in a downtrend, stay in cash and observe. Never trade against the trend, such as blindly “bottom-fishing” in a downtrend.

3. Exit when the trend weakens

When clear signs of weakening or reversal appear, exit to protect profits.

Second, core methods: how to implement trend-following?

Trend-following is not a single method but a system that includes philosophy, tools, and rules.

1. Trend recognition tools

Moving averages: the most common tool. For example, if the stock price is above the 200-day (long-term), 60-day (mid-term), and 20-day (short-term) moving averages, and the short-term MA is above the long-term MA (bullish alignment), it indicates an uptrend. Conversely, the opposite suggests a downtrend.

Example: Stock A’s price stays above the 60-day MA, and the 60-day MA is trending upward, indicating a medium-term uptrend.

Trend lines: connecting a series of rising lows (support lines) or falling highs (resistance lines).

High-low structure: in an uptrend, prices should continuously make higher highs and higher lows; in a downtrend, the opposite.

ADX indicator: measures trend strength. When ADX is above 25, the trend is considered strong.

2. Entry methods

Pullback entry: in an uptrend, wait for the price to pull back to key support levels (like trend lines, previous highs, or important moving averages) and stabilize before buying.

Example: Stock B is in an upward channel, pulls back near the 20-day MA with a bullish reversal candle (long lower shadow, bullish engulfing, etc.), and doesn’t break previous lows—consider it a trend-following buy signal.

Breakout entry: after consolidation, buy when the price breaks above important resistance levels or previous highs, confirming a new upward wave.

Example: Stock C oscillates between 30-33 yuan for months, then breaks out with volume at 33 yuan and stabilizes—signaling a potential acceleration of the trend.

3. Risk management and exit methods

Stop-loss setting: the “lifeline” of trend-following. Usually set just below the trend structure (based on the entry logic).

Example: buy near the trend line, set stop-loss 2-3% below it. If the price falls below, the trend may have changed, and you must exit promptly.

Trailing stop: as the stock rises, gradually raise the stop-loss to protect floating profits. For example, once the price moves far from the 20-day MA, move the stop-loss up to the MA or recent lows.

Trend reversal signals: when key reversal patterns (like head and shoulders, double tops), moving average death crosses, or breaking long-term trend lines occur, close all positions and exit.

Third, classic example explanation

Case background: a leading stock in a certain sector shows a strong upward trend.

Trend-following trader’s process:

1. Recognize the trend (mid-year)

Observe the chart, find the stock price above all major MAs (60, 120, 250 days), with MAs in a bullish arrangement.

Higher highs and higher lows are continuously formed, with a clear upward trend line.

Conclusion: the stock is in a clear long-term uptrend. Strategy: look for long opportunities.

2. Find entry points

Method A (pullback entry): late in the year, after a rapid rise, the price pulls back to the 60-day MA and stabilizes with decreasing volume. Trend followers buy in this area.

Method B (breakout entry): early next year, after weeks of consolidation, the stock volume breaks above the previous consolidation high, confirming a new upward move.

3. Holding and risk management

Initial stop-loss: for pullback entries, set below the 60-day MA.

Trailing stop: as the price climbs, move the stop-loss up to important short-term MAs (like 20-day) or recent lows, and hold firmly as long as the trend continues—“let profits run.”

4. End of trend and exit

End of the next year: the stock experiences intense volatility at high levels, then breaks below the long-term upward trend line and the 60-day MA, with MAs flattening and converging.

Action: regardless of market sentiment, trend-followers follow the system signals, believing the main upward trend has ended, and decisively exit to lock in most profits.

Fourth, the significance, advantages, and disadvantages of trend-following

Significance:

1. Capture major market moves and maximize profits

The core is to seize the main market trend, avoiding frequent trading in sideways markets that erode capital, and gaining substantial returns when a trend emerges.

2. Objectify trading decisions

Operate based on chart and indicator signals, reducing emotional influences (like greed and fear) and subjective guesses.

3. Strict risk control

Clear entry, stop-loss, and exit rules form a disciplined trading system that minimizes losses when wrong.

4. Aligns with market nature

Market prices evolve in trends; trend-following respects the market’s forces.

Advantages:

When the trend is clear, profit potential is huge. The trading logic is straightforward, easy to systematize and execute.

Effectively avoids the risk of “catching falling knives” by trading against the trend.

Disadvantages and challenges:

Wear and tear in sideways markets: during non-trending consolidation phases, trend-following systems generate many false signals, leading to small losses. Using “no trading in sideways” strategies can avoid this.

Lagging nature: most trend-following tools are lagging, so it’s impossible to buy at the absolute bottom or sell at the top. Using multi-cycle strategies can reduce lag.

Requires strong patience and discipline: waiting for clear trends and optimal entry points, and sticking to stop-loss rules, is a big test of human nature.

That’s all for today.

Like and follow for more benefits and red envelopes in the future!

This is my personal understanding, I hope it helps brothers and sisters!

Thanks to everyone who has supported us!

After the holiday, spend more energy and give timely hints on opportunities to brothers!