You need a special wrench to adjuct the bottom nut at 2 (headset wrench). It is something like 32 mm and is fairly thin. Loosen the top nut at 2, tighten the bottom nut at 2 to remove wobble. Then holding bottom nut in that position with above wrench, tighten top nut against bottom nut. Check that steering can turn freely without wobbling - if it isnt start again to readjust.