A Practical Guide to Trend Trading: Core

A Practical Guide to Trend Trading: Core Strategies for Accurately Capturing Major Uptrends

 

In the world of trend trading, major uptrends represent the phase with the most concentrated profits and the strongest price movements. The ability to accurately capture them directly determines the final returns of a trade. However, major uptrends are not without traces—their initiation and continuation are often accompanied by clear signals. As long as you master a systematic set of judgment and operation methods, you can significantly increase the probability of seizing this wave of market opportunities.

 

To capture a major uptrend, the first step is to clarify the direction of the long-term trend, which serves as the premise for all operations. A "major uptrend" divorced from the overall trend is mostly a short-term fluctuation with extremely high risks. The most intuitive way to judge the trend is by using large-timeframe charts such as weekly charts. When stock prices move along an upward trajectory to the right over the long term, with continuously higher lows and new highs, it indicates that an upward trend has been formed. At this point, going long aligns with the principle of "following the trend." In addition, the 20-day moving average is also an important tool for trend judgment. When stock prices stand firmly above the 20-day moving average and the average turns from flat or downward to a clear upward direction, it means the short-term trend has shifted from weak to strong, and the foundation for the initiation of a major uptrend is in place.

 

After confirming an upward trend, technical analysis becomes the key to finding entry points. Among various technical signals, the emergence of a key breakthrough point is an important sign of a major uptrend's start. When stock prices break through a long-term descending trend line that has been acting as resistance, or break through the neckline of a key consolidation platform formed in the early stage, it often signifies a fundamental shift in the balance of power between bulls and bears. It should be noted, however, that an effective breakthrough must be accompanied by a significant increase in trading volume—this reflects the recognition of the breakthrough by market funds and helps avoid falling into the trap of a "false breakout." After a breakthrough, stock prices usually do not rise all the way directly; instead, they often pull back. This pullback not only verifies the validity of the breakthrough but also presents an excellent secondary entry opportunity. When the pullback reaches the breakout level or key support levels such as the 20-day moving average, if trading volume shrinks significantly, it indicates that selling pressure has been exhausted, and entering the market at this point offers lower risks and higher cost-effectiveness.

 

Trading volume is the "engine" of a major uptrend—an upward movement without volume support cannot be sustained. Before the initiation and during the operation of a major uptrend, trading volume exhibits distinct characteristics: the trading volume on upward-trending trading days must be at least 1.2 times the 20-day average volume, reflecting the active inflow of buying funds; while the trading volume on pullback days needs to shrink to less than 80% of the 20-day average volume, indicating that market chips are well-locked and holders have a stable mindset. This volume coordination—"expanding volume on rises and shrinking volume on pullbacks"—is direct evidence of a high-quality major uptrend and also indicates that the market still has significant room for further movement.

 

Multi-timeframe resonance can further improve the success rate of capturing major uptrends and avoid misjudgments caused by signals from a single timeframe. In practical trading, you can adopt the strategy of "using weekly charts to determine direction, daily charts to identify patterns, and 15-minute charts to pinpoint entry points": weekly charts confirm the long-term upward trend to ensure the overall market environment is correct; daily charts are used to observe whether classic bullish patterns (such as breakouts or head-and-shoulders bottoms) appear, locking in the general entry range; short-timeframe charts like the 15-minute chart are used to find more precise entry points, such as the downside-stopping signals that appear when the short-term price pulls back to support levels. When signals from the three timeframes are simultaneously positive, "multi-timeframe resonance" is formed. Entering the market at this time not only offers a better timing but also effectively reduces the risk of misjudgment.

 

Finally, setting reasonable stop-loss and take-profit levels is crucial for protecting the profits from a major uptrend. Although major uptrends are strong, trend reversals may still occur. Without proper risk control, it is easy to shift from profitability to losses. The initial stop-loss can be set at approximately 2% below the entry cost. Once the stock price falls below the stop-loss level, it indicates that the previous judgment may be incorrect, and you need to exit in a timely manner to avoid risks. When the floating profit reaches 8%, you can move the stop-loss level up to the break-even point to ensure at least no loss. During the continuous advancement of the trend, you can adopt a "dynamic stop-loss" strategy: after the market closes each day, move the stop-loss level up to 0.8% below the day's lowest price. This not only locks in existing profits but also provides sufficient room for the market to move, avoiding missing out on subsequent gains due to exiting too early.

 

In summary, capturing a major uptrend is a complete process of "identifying the trend, finding signals, observing volume, pinpointing entry points, and controlling risks." It requires patience to wait for signal resonance rather than blindly chasing highs. Only by integrating these strategies into practical trading and continuously summarizing and optimizing can you consistently capture major uptrends in trend trading and achieve steady growth in returns.