Once consistency is achieved, a trader can selectively increase risk exposure to capture outsized gains, leveraging profits from the market rather than core seed capital.
In an uptrend, after the trendline breaks, the price will attempt to rally back toward its previous high. To fulfill Step 2, this rally must fail to breach the previous peak, resulting in a lower high. (Conversely, in a downtrend, the price will attempt to drop but fail to make a lower low, creating a higher low). Step 3: The Breach of the Previous Minor Low/High
: Price breaks below the intermediate low established during the retest phase. Once all three conditions are met, a formal trend change is confirmed. The 2B Indicator (The Spring) Once consistency is achieved, a trader can selectively
: Cut losing trades immediately when the market proves your thesis wrong.
Sperandeo treats trading not as a hobby or a lottery, but as a business. He argues that the primary goal of a trader is not to make money, but to preserve capital. If a trader preserves capital, profitability follows naturally through the compounding of successful decisions. (Conversely, in a downtrend, the price will attempt
Sperandeo’s methods influenced:
How to according to his strict criteria Historical examples of the 2B setup in action How to apply his options trading strategies to manage risk The 2B Indicator (The Spring) : Cut losing
| Principle | Rule | |-----------|------| | Maximum loss per trade | 1% of total capital (2% absolute max) | | Risk/reward ratio | Minimum 1:3 (risk $1 to make $3) | | Stop loss | Always placed based on technical levels, not arbitrary percentages | | Position sizing | Adjust so that a stop-out loses no more than 1% of capital |