Based on Song Jianwen (宋建文), 炒股怎能不懂波段 (How to Trade Waves)
Song Jianwen's How to Trade Waves is a practical guide to swing/wave trading specifically designed for China's A-share market. The core argument is that A-shares, with their unique structural characteristics (T+1 settlement, 10% daily limits, retail dominance), are ideally suited for wave trading — a methodology that captures price swings lasting days to weeks rather than trying to hold through entire bull/bear cycles or day-trading individual sessions.
The wave trading thesis:
1. Stock prices do not move in straight lines — they move in WAVES (oscillations)
2. Even within an uptrend, there are pullbacks; within a downtrend, there are bounces
3. Each wave has an identifiable beginning and ending point
4. By buying at wave bottoms and selling at wave tops, traders can capture most of the
profitable movement while avoiding most of the painful drawdowns
5. Wave trading is PARTICULARLY effective in A-shares because:
- Retail-dominated markets create exaggerated swings
- T+1 settlement discourages ultra-short-term trading (natural swing timeframe)
- 10% daily limits create definable risk boundaries
- Policy-driven volatility creates frequent wave opportunities
Approach | Timeframe | A-Share Suitability | Key Advantage
-----------------|----------------|---------------------|---------------------------
Day trading | Intraday | Poor (T+1 limits) | Quick profits
Swing/Wave | 3-20 days | Excellent | Captures trends, avoids noise
Position trading | 1-12 months | Good | Lower maintenance
Buy and hold | 1-10+ years | Moderate | Simple, but volatile
Song's argument for why wave trading is optimal in A-shares:
A complete wave cycle in an uptrend:
Peak 2
/\
/ \ Peak 3 (higher)
/ \ /\
/ \ / \
/ Wave \ / \
/ 2 Up \ / Wave \
Peak 1 \ / 3 Up \
/\ Wave Trough 2 ...
/ \ 2 Down (higher)
/ \ /
Wave \ /
1 Up \/
Trough 1
Uptrend = sequence of higher peaks and higher troughs
Each "wave" = one swing from trough to peak (up wave) or peak to trough (down wave)
The goal: Buy near troughs, sell near peaks
Wave Type | Duration | Typical Magnitude | Frequency
-----------------|-------------|-------------------|------------------
Minor wave | 1-3 days | 3-8% | Very frequent
Intermediate wave| 5-15 days | 10-25% | Moderate
Major wave | 20-60 days | 25-50%+ | Less frequent
Cycle wave | 3-12 months | 50-100%+ | Rare
Song's primary focus: INTERMEDIATE waves (5-15 trading days)
These offer the best balance of:
- Large enough magnitude to generate meaningful profits after costs
- Short enough duration to maintain multiple opportunities per quarter
- Frequent enough to keep capital actively deployed
A-share wave characteristics that differ from Western markets:
1. SHARPER OSCILLATIONS: Retail herding creates more violent swings in both directions
→ Wave magnitudes tend to be larger than equivalent US stocks
2. VOLUME SPIKES: Wave peaks are often marked by extreme volume (retail FOMO buying)
→ Volume is a particularly reliable wave timing tool in A-shares
3. POLICY-DRIVEN WAVES: Government announcements can trigger multi-day waves
→ Wave traders must monitor policy calendar
4. SECTOR ROTATION WAVES: Money rotates between sectors in predictable patterns
→ Sector-level wave analysis adds a timing dimension
5. LIMIT-MOVE COMPRESSION: 10% daily limits compress multi-day moves into concentrated waves
→ Consecutive limit-up or limit-down days create distinctive wave patterns
Why wave trading has positive expectancy in A-shares:
1. TREND ALIGNMENT: By only buying during up-waves within uptrends, you align with the
dominant force. The trend does most of the work.
2. RISK DEFINITION: Wave troughs provide clear stop-loss levels. If the trough is violated,
the wave thesis is wrong. Exit immediately with a defined loss.
3. PROFIT POTENTIAL: Wave peaks provide clear profit-taking zones. You capture the meat of
the move without needing to catch the exact top or bottom.
4. BEHAVIORAL EDGE: Most retail investors buy at wave peaks (FOMO) and sell at wave troughs
(panic). Systematic wave traders do the opposite.
Expected win rate: 45-55% (not high, but adequate)
Expected reward/risk: 2:1 to 3:1 (the key to profitability)
Expected expectancy: 0.4 to 0.8R per trade
SWING HIGH (波段高点):
A price bar whose high is HIGHER than the highs of the bars on both sides.
Minimum qualification: The bar's high exceeds the highs of the 2 bars before
and 2 bars after (confirmed only in hindsight by 2 bars).
Strict definition (3-bar swing high):
High[today] > High[yesterday] AND High[today] > High[tomorrow]
AND High[today] > High[2 days ago] AND High[today] > High[2 days later]
SWING LOW (波段低点):
A price bar whose low is LOWER than the lows of the bars on both sides.
Same minimum qualification: 2 bars confirmation on each side.
Strict definition (3-bar swing low):
Low[today] < Low[yesterday] AND Low[today] < Low[tomorrow]
AND Low[today] < Low[2 days ago] AND Low[today] < Low[2 days later]
UPTREND: Successive swing highs are HIGHER and successive swing lows are HIGHER
SH1 < SH2 < SH3 AND SL1 < SL2 < SL3
DOWNTREND: Successive swing highs are LOWER and successive swing lows are LOWER
SH1 > SH2 > SH3 AND SL1 > SL2 > SL3
SIDEWAYS: No consistent pattern in swing highs/lows
(Higher high followed by lower low, or vice versa)
Trading implication:
UPTREND: Buy at swing lows, sell at swing highs
DOWNTREND: Stand aside (or short if experienced, but A-share shorting is limited)
SIDEWAYS: Trade the range boundaries or stand aside
RELIABLE SWING LOW:
- Price makes a new low in the wave
- Volume DECREASES at the low (selling exhaustion)
- Next day: Price bounces with INCREASING volume (buyers returning)
- This pattern has high reliability for marking wave bottoms
RELIABLE SWING HIGH:
- Price makes a new high in the wave
- Volume SPIKES to extreme levels (buying climax / FOMO)
- Next day: Price reverses down, often on continued high volume
- This pattern marks distribution and wave tops
UNRELIABLE SWING PATTERNS:
- Low on HIGH volume (forced selling, may cascade further)
- High on LOW volume (no conviction, may continue higher)
- These require additional confirmation before acting
Song's moving average framework for wave identification:
5-day MA: Tracks the minor wave (too noisy for primary signals, useful for entry refinement)
10-day MA: Primary wave signal — the "wave line"
20-day MA: Intermediate trend confirmation
60-day MA: Major trend direction
WAVE BUY SIGNAL:
Price crosses above 10-day MA from below, with 10-day MA above 20-day MA
(Wave trough confirmed, new up-wave beginning)
WAVE SELL SIGNAL:
Price crosses below 10-day MA from above, with declining volume
(Wave peak confirmed, new down-wave beginning)
METHOD 1: WAVE TROUGH ENTRY (Highest reward, moderate difficulty)
When: After a swing low is confirmed (price bounces from a trough)
How: Buy when price closes above 10-day MA after dipping below it
Stop: Below the confirmed swing low
Target: Previous swing high or higher
Risk/Reward: Typically 2:1 to 3:1
METHOD 2: WAVE CONTINUATION ENTRY (Moderate reward, lower difficulty)
When: During an established up-wave after a brief pause
How: Buy when price breaks above a 3-5 day consolidation within the wave
Stop: Below the consolidation low
Target: Measured move (consolidation height projected upward)
Risk/Reward: Typically 1.5:1 to 2:1
METHOD 3: BREAKOUT ENTRY (Highest risk, highest potential)
When: Price breaks above the previous swing high to a new wave high
How: Buy on the breakout bar with volume > 2x average
Stop: Below the breakout bar's low or the previous swing high (now support)
Target: Measured move (previous wave height projected from breakout)
Risk/Reward: Typically 1.5:1 to 2.5:1
To identify a valid wave trough in real-time:
Step 1: PRECONDITION — Stock is in an uptrend (20-day MA rising, above 60-day MA)
Step 2: PULLBACK — Price drops from recent swing high toward support zone
Step 3: SUPPORT ZONE — Identify where the trough is likely to form:
a) Previous swing low area
b) 20-day moving average
c) Fibonacci 38.2% or 50% retracement of the prior up-wave
d) High-volume node from the prior wave (volume profile support)
Step 4: EXHAUSTION — Volume dries up at the pullback low (sellers exhausted)
Step 5: REVERSAL — Price starts to bounce:
- Close above prior day's high
- Volume increases on the bounce day
- 5-day MA turns upward
Step 6: CONFIRMATION — Price closes above 10-day MA
→ THIS is the entry point (not the exact bottom, but a confirmed trough)
For A-share wave entries:
PREFERRED: Buy in the LAST 30 MINUTES of trading on the confirmation day.
Why: Reduces overnight gap risk (you've seen the full day's action).
If the stock is still above 10-day MA at 2:30 PM with good volume, the signal is valid.
ACCEPTABLE: Buy at the OPEN of the next day after confirmation.
Why: Overnight gap may add or subtract from the entry, but the signal is confirmed.
AVOID: Buying in the FIRST 30 MINUTES of any day.
Why: A-share opens are volatile and often reverse. Opening prices are unreliable.
The T+1 rule means you cannot exit the same day if the opening entry fails.
To identify a wave peak in real-time:
Step 1: Stock has been in an up-wave for 5+ days with rising price
Step 2: CLIMAX SIGNALS appear:
a) Volume spike to 2x+ daily average (buying climax)
b) Large range bar (wide spread between high and low)
c) Price gap up at open (exhaustion gap)
d) Price reaches previous swing high resistance zone
e) 5-day MA flattens and begins to turn down
Step 3: REVERSAL BAR: Price closes in the lower half of the day's range
OR: Price closes below the 5-day MA for the first time in the wave
Step 4: CONFIRMATION: Next day's close is below the reversal day's low
→ THIS is the exit point
Note: You will NOT sell at the exact peak. The goal is to capture 60-80% of the wave.
EXIT SIGNALS (in order of urgency):
URGENT (exit immediately, do not wait for confirmation):
1. Stop-loss hit
2. Earnings shock or major negative news
3. Stock hits limit-down (sell at first opportunity next day)
4. Sector-wide policy negative announcement
STANDARD (exit at next opportunity):
1. Price closes below 10-day MA after confirmed up-wave
2. Volume climax + reversal bar (wave peak pattern)
3. Price target reached (at previous swing high or measured move)
OPTIONAL (tighten stops, prepare to exit):
1. Divergence between price (new high) and volume (lower than previous high)
2. Stock reaches upper boundary of rising channel
3. Market index showing distribution pattern
For larger positions or higher-conviction waves:
AT FIRST TARGET (1.5R or previous swing high):
Sell 50% of position. Move stop on remainder to breakeven.
AT EXTENDED TARGET (2.5R or measured move target):
Sell remaining 50%. Or hold with tight trailing stop (below 5-day MA).
Rationale: Partial exits lock in profit while allowing participation in extended waves.
In A-shares, up-waves occasionally extend dramatically (consecutive limit-up days).
The remaining position captures these outlier events.
MARKET-LEVEL:
□ Shanghai Composite is above its 20-day MA (favorable wave environment)
□ Market is not in a confirmed downtrend (60-day MA declining)
□ No major policy risk event within 3 days
STOCK-LEVEL:
□ Stock is in an uptrend (higher swing highs and higher swing lows)
□ Stock is above its 60-day MA
□ 20-day MA is rising and above 60-day MA
WAVE IDENTIFICATION:
□ A swing low has been confirmed (per protocol in Section 4.2)
□ Price has bounced from a support zone with increasing volume
□ Price has closed above 10-day MA (wave trough confirmation)
RISK ASSESSMENT:
□ Stop-loss level identified (below swing low)
□ Stop distance is less than 8% of entry price
□ Risk per trade is less than 2% of portfolio
□ Target (previous swing high) provides at least 2:1 reward/risk
PORTFOLIO:
□ Fewer than 5 open wave positions
□ Total portfolio risk less than 8%
□ Not adding to an existing position in the same stock
Sector rotation adds a powerful timing dimension:
STRONG SECTOR SIGNAL: The stock's sector index is itself in an up-wave
→ Higher probability trade. Use full position size.
NEUTRAL SECTOR SIGNAL: Sector is sideways or indeterminate
→ Moderate probability. Use 70% of normal position size.
WEAK SECTOR SIGNAL: Sector is in a down-wave but individual stock is strong
→ Lower probability. Use 50% of normal position size.
→ The stock must have very strong relative strength to override sector weakness.
Song advocates precise entry rather than market orders:
PREFERRED ENTRY METHOD:
Set a limit buy order slightly above the 10-day MA (1-2% above).
This ensures you enter only if the wave confirmation signal is valid.
If the stock gaps above your limit by more than 3%, DO NOT CHASE.
Wait for a pullback to the 10-day MA area. If it never pulls back,
miss the trade. There will be another wave.
AVOID:
- Market orders at the open
- Buying after a 5%+ gap up
- Chasing a stock that is already 3+ days into its up-wave
INITIAL STOP: Set at the time of entry
Wave Trough Entry:
Stop = Confirmed swing low × 0.98 (2% below swing low)
Rationale: If the swing low is violated, the up-wave thesis is wrong
Wave Continuation Entry:
Stop = Consolidation low × 0.99 (1% below consolidation low)
Rationale: If consolidation breaks down, the continuation thesis is wrong
Breakout Entry:
Stop = Breakout bar low or previous swing high (now support)
Rationale: If the breakout fails, the breakout thesis is wrong
MAXIMUM STOP: 8% below entry price regardless of swing point location
If the swing low requires a wider stop, REDUCE POSITION SIZE rather than widen stop.
As the wave progresses, move the stop upward:
Phase 1 (Entry to +1R):
Keep stop at initial level. Do NOT move to breakeven prematurely in wave trading
(waves need room to oscillate intraday).
Phase 2 (+1R to +2R):
Move stop to breakeven (entry price).
This creates a "free trade" — you can no longer lose money on this position.
Phase 3 (Beyond +2R):
Trail stop below the most recent minor swing low (1-2 day pullback low).
Alternative: Trail below 5-day MA.
Phase 4 (Peak signals appearing):
Tighten stop aggressively: below yesterday's low.
Any close below yesterday's low = exit.
Wave trades should not last indefinitely. Time stops:
If the stock has not reached +1R within 5 trading days:
→ The wave may be weaker than expected. Tighten stop to below 10-day MA.
If the stock has not reached +1R within 8 trading days:
→ Exit at the close. The wave thesis has failed (even if not at stop-loss level).
If the stock reaches +1R but then oscillates sideways for 5+ days:
→ Sell 50% and trail remaining with stop below the sideways range.
Rationale: Capital tied up in a stalled wave has an opportunity cost.
Better to free capital for the next wave setup.
Step 1: Determine stop distance
Entry: ¥30
Stop: ¥27.80 (below swing low)
Risk per share: ¥2.20
Step 2: Apply 2% rule
Capital: ¥400,000
Max risk: ¥400,000 × 0.02 = ¥8,000
Step 3: Calculate shares
Shares: ¥8,000 / ¥2.20 = 3,636 → round to 3,600 (36 lots)
Position value: 3,600 × ¥30 = ¥108,000 (27% of capital)
Step 4: Verify portfolio heat
Current open risk: ¥15,000 (from 2 other positions)
New risk: ¥8,000
Total risk: ¥23,000 / ¥400,000 = 5.75%
Maximum: 8% → ACCEPTABLE
Step 5: Verify sector concentration
Current exposure to this sector: 15%
After this trade: 15% + 27% = 42% → EXCEEDS 30% LIMIT
→ Reduce position to comply: ~¥60,000 (15% of capital)
→ Shares: 2,000 at ¥30 = ¥60,000
→ Adjusted risk: 2,000 × ¥2.20 = ¥4,400 (1.1% of capital) — acceptable
The wave trader should always have capital available for new opportunities:
FULLY INVESTED: Never. Always maintain at least 20% cash reserve.
NORMAL DEPLOYMENT: 60-80% in positions, 20-40% in cash
AFTER CONSECUTIVE LOSSES: 40-60% in positions, 40-60% in cash
POOR WAVE ENVIRONMENT: 20-40% in positions, 60-80% in cash (market choppy, waves unclear)
The cash reserve serves two purposes:
1. Capital for new wave entries (you cannot catch a wave trough without available cash)
2. Psychological buffer (knowing you have cash reduces emotional pressure)
Losing Streak Protocol:
3 consecutive losses: Reduce position size by 30% for next 5 trades
Reason: Normal losing streak for a 50% win rate system. Minor adjustment.
5 consecutive losses: Reduce position size by 50% for next 10 trades
Reason: Possible market regime unfavorable for wave trading. Reduce exposure.
7 consecutive losses: Stop trading for 1 week. Paper trade only.
Reason: Either system is not working in current environment, or execution errors
have crept in. Review all recent trades. Identify the problem.
10 consecutive losses: Stop trading for 1 month. Full system review.
Reason: Something is fundamentally wrong. Market environment may have changed.
Do not resume until root cause is identified and addressed.
NO LEVERAGE for wave trading. Ever.
Wave trading has a 45-55% win rate. This means 5-10 consecutive losses are statistically
normal over a year of trading. With leverage, such a streak can cause forced liquidation.
Without leverage, a 10-loss streak at 2% risk per trade costs 20% of capital.
Painful but survivable. With 2x leverage, the same streak costs 40%. Potentially fatal.
EVENING BEFORE (30 minutes):
1. Scan for wave trough setups forming across watchlist (100-150 stocks)
2. Identify stocks approaching buy zones (near support, volume declining)
3. Calculate position sizes and stop levels for potential entries
4. Set alerts for entry and stop price levels
5. Write tomorrow's plan: "If Stock A reaches ¥X, buy Y shares. Stop at ¥Z."
MORNING (10 minutes):
1. Check overnight news for any events affecting positions or setups
2. Verify stop-loss orders are active for all open positions
3. Review the plan — any changes needed based on pre-market information?
MARKET HOURS:
1. At 9:30 AM (open): Observe opening action. Do NOT trade in first 15 minutes.
2. At 2:00 PM: Check for entry signals (wave trough confirmations)
3. At 2:30 PM: Execute planned entries if signals confirmed
4. At 3:00 PM (close): Record closing prices for all positions and watchlist
AFTER CLOSE (15 minutes):
1. Update trading journal for all actions taken
2. Grade each decision (A/B/F)
3. Note emotional state during key moments
4. Scan for new wave setups forming for tomorrow
RULE 1: ONE ENTRY PER STOCK PER WAVE
Do not buy the same stock multiple times within the same wave.
If you miss the entry, wait for the next wave.
RULE 2: DO NOT AVERAGE DOWN IN A WAVE TRADE
If the stock moves against you, the wave thesis is failing.
Averaging down doubles your exposure to a failing thesis.
RULE 3: DO NOT CHASE
If a stock moves 5%+ past your intended entry point, let it go.
Chasing results in poor risk/reward ratios and emotional entries.
RULE 4: EXIT MECHANICALLY
When a stop is hit or an exit signal triggers, sell at the NEXT AVAILABLE price.
Do not wait for "a better price" or "one more day."
RULE 5: RESPECT THE MARKET ENVIRONMENT
In a choppy, sideways market with no clear waves, REDUCE ACTIVITY.
Wave trading requires waves. If the ocean is calm, there is nothing to ride.
RULE 6: MAINTAIN THE JOURNAL
Every trade recorded. Every emotion noted. Every process graded.
The journal is how you improve. Without it, you repeat the same mistakes.
ACCEPT: You will sell near the bottom of up-waves (stopped out on pullbacks).
This is the cost of protection. Some stop-outs are immediately followed by recovery.
This is normal and not a reason to widen stops.
ACCEPT: You will miss the exact top of every wave.
No one consistently sells at the peak. Capturing 60-70% of a wave is excellent.
ACCEPT: You will have losing streaks.
A 50% win rate means 10 consecutive losses will happen statistically. When it does,
it is not a reason to panic or change the system.
ACCEPT: Some waves will be tiny (small profit or scratched for breakeven).
Not every wave develops into a large move. Small wins and breakevens are acceptable
as long as the occasional large wave more than compensates.
ACCEPT: Missing a wave is always better than forcing a bad trade.
There are hundreds of wave opportunities per year. Missing one costs nothing.
Forcing a bad trade can cost your capital.
Mistake #1: BUYING IN THE MIDDLE OF A WAVE
Buying when the up-wave is already 5-8 days old and 15-20% above the swing low.
Result: Poor entry, wide stop (to below swing low), terrible risk/reward.
Fix: Only enter within 2-3 days of a confirmed swing low.
Mistake #2: SELLING IN THE MIDDLE OF A WAVE
Exiting because of a normal 1-2 day pullback within an up-wave.
Result: Missing the remaining 50-70% of the wave's potential.
Fix: Only exit on confirmed wave peak signals or stop-loss triggers.
Mistake #3: FIGHTING THE TREND DIRECTION
Trying to buy wave troughs during a downtrend.
Result: Each "bounce" is lower than the last. Accumulating losses.
Fix: Only buy wave troughs within UPTRENDS (higher highs and higher lows).
Mistake #4: IGNORING VOLUME SIGNALS
Entering a "wave trough" without volume confirmation (selling exhaustion).
Result: Many false wave troughs — price continues to decline after "bounce."
Fix: Require volume contraction at the trough + volume expansion on the bounce.
Mistake #5: OVERTRADING WAVES
Trading every minor oscillation (1-3 day micro-waves).
Result: Transaction costs and slippage consume all profits. T+1 adds overnight risk.
Fix: Focus on intermediate waves (5-15 days). Ignore minor fluctuations.
Mistake #6: INCONSISTENT TIMEFRAME
Using 60-day MA for trend but 5-minute charts for entry timing.
Result: Contradictory signals, confusion, emotional decisions.
Fix: Choose ONE timeframe and use it consistently for all decisions.
Mistake #7: NOT ACCOUNTING FOR T+1
Buying at the close on "confirmation day" and being trapped by a gap-down next morning.
Result: Cannot sell until the next day, by which time the loss may be larger.
Fix: Consider T+1 in all entry planning. If you cannot afford to hold overnight, skip.
WAVE IDENTIFICATION
Date: Day 0 (Monday)
Stock: ABC Manufacturing, price ¥35.20
Context: Stock has been in an uptrend for 2 months (higher highs and higher lows)
60-day MA: ¥32 (rising), 20-day MA: ¥34 (rising), 10-day MA: ¥35.50 (flat)
Most recent swing high: ¥38 (reached 8 trading days ago)
Stock has been pulling back: ¥38 → ¥37 → ¥36 → ¥35.20
Volume declining on the pullback (good — selling exhaustion)
Support zone: 20-day MA at ¥34 + previous swing low at ¥33.50
WATCHING THE WAVE TROUGH FORM
Day 1 (Tuesday): Stock drops to ¥34.30 (near 20-day MA). Volume very low. Holds support.
Day 2 (Wednesday): Stock dips to ¥33.80, bounces to close at ¥34.50.
Volume: Low at the dip, picks up on the bounce. Bullish reversal candle.
5-day MA starting to flatten.
Day 3 (Thursday): Stock closes at ¥35.20. Back above 10-day MA (¥35.00).
Volume: Expanding. ✓ This is the wave trough CONFIRMATION signal.
ENTRY PLANNING (Thursday evening)
Entry: ¥35.20 (or limit at ¥35.50 if gap up Friday)
Swing low: ¥33.80 (Day 2 low)
Stop: ¥33.10 (¥33.80 × 0.98, 2% below swing low)
Risk per share: ¥35.20 - ¥33.10 = ¥2.10
Target 1: ¥38 (previous swing high) = ¥2.80 gain → 1.3R
Target 2: ¥40 (measured move above previous high) = ¥4.80 gain → 2.3R
Capital: ¥500,000
Max risk (2%): ¥10,000
Shares: ¥10,000 / ¥2.10 = 4,761 → round to 4,700 shares (47 lots)
Position value: 4,700 × ¥35.20 = ¥165,440 (33% of capital)
ENTRY EXECUTION
Day 4 (Friday), 2:30 PM:
Stock at ¥35.40, above 10-day MA, volume healthy.
Buy 4,700 shares at ¥35.40 (slight slippage from planned ¥35.20)
Actual risk per share: ¥35.40 - ¥33.10 = ¥2.30
Actual risk: 4,700 × ¥2.30 = ¥10,810 (2.16% — slightly above 2%, acceptable)
TRADE MANAGEMENT
Day 5 (Monday): Stock opens ¥35.80, closes ¥36.20. Wave developing. HOLD.
Day 6 (Tuesday): Stock reaches ¥37.00. +¥1.60/share (0.7R). HOLD.
Stop remains at ¥33.10 (not yet at +1R to move to breakeven).
Day 7 (Wednesday): Stock reaches ¥37.70. +¥2.30/share (1.0R). ✓
Move stop to ¥35.40 (breakeven). FREE TRADE.
Day 8 (Thursday): Stock closes ¥38.20. Reaches previous swing high (¥38).
This is Target 1. Sell 50% (2,350 shares) at ¥38.20.
Locked profit: 2,350 × (¥38.20 - ¥35.40) = ¥6,580
Remaining: 2,350 shares. Move trailing stop to ¥36.50 (below minor swing low).
Day 9 (Friday): Stock pushes to ¥39.50 on expanding volume. New high.
Raise trailing stop to ¥37.80 (below Day 8 low).
Day 10 (Monday): Stock gaps up to ¥40.20 on HUGE volume (2.5x average).
Climax volume + gap up = WARNING SIGNAL. Tighten stop to ¥39.00.
Day 11 (Tuesday): Stock opens ¥40.50, reverses, closes ¥39.30.
Volume still elevated. Reversal bar from climax. Wave peak likely.
Day 12 (Wednesday): Stock opens ¥39.00, drops to ¥38.80. Hits trailing stop.
Sell remaining 2,350 shares at ¥39.00.
FINAL ACCOUNTING
Tranche 1: 2,350 shares × (¥38.20 - ¥35.40) = ¥6,580
Tranche 2: 2,350 shares × (¥39.00 - ¥35.40) = ¥8,460
Total profit: ¥15,040
Risk taken: ¥10,810
R-multiple: 1.39R
Duration: 8 trading days
Process grade: A (followed all rules, no improvisation)
"Stock prices do not move in straight lines. They move in waves. The trader who understands
waves has an inherent advantage over the trader who only sees trends."
"In A-shares, wave trading is not just one strategy among many — it is the NATURAL strategy.
T+1 settlement, daily price limits, and retail herding all create a market that oscillates
in definable, tradeable waves."
"The wave trough is where money is made. The wave peak is where money is protected. Most
retail investors have this exactly backwards — they buy at peaks and sell at troughs."
"Volume tells you everything about a wave that price cannot. Volume exhaustion at the trough
says 'sellers are done.' Volume climax at the peak says 'buyers are done.' Listen to volume."
"Do not try to catch the exact bottom of a wave. Wait for confirmation — the price closing
above the 10-day moving average. You sacrifice the first 10-20% of the wave in exchange
for dramatically higher probability that the wave is real."
"The best wave trades feel uncomfortable at entry. You are buying when the stock has been
falling. You are buying when others are selling. If it feels easy and obvious, the wave
has already moved without you."
"In wave trading, missing a wave is free. Forcing a bad trade costs money. There will be
another wave tomorrow, next week, next month. There is no rush."
"Your stop-loss is not a suggestion. It is a contract with yourself. Break the contract
once, and your brain will find reasons to break it again and again."
"The intermediate wave — 5 to 15 trading days — is the sweet spot for A-share retail traders.
Short enough to maintain multiple opportunities per quarter. Long enough to generate
meaningful profits after transaction costs."
"Wave trading is not day trading and it is not investing. It is a middle path that captures
the best of both: the participation of active trading and the patience of investing."
"Your position size must be determined by the STOP DISTANCE, not by how much you want to own
or how much the stock costs. This is the difference between risk management and gambling."
"Keep a chart album of your best and worst wave trades. Patterns will emerge. Your best
trades share characteristics. Your worst trades share different characteristics.
This album is your most personalized trading education."
Implementation specification compiled from Song Jianwen (宋建文), 炒股怎能不懂波段. This document is a systematic distillation for practical application and does not replace reading the original work.