A Letter to Short-Term Traders

1 The short-term trading market is essentially a “barrel effect.” Your goal is to use a bulldozer mindset to achieve long-term, stable compounding returns. Whether you can do that doesn’t depend on your strengths—it depends on your weaknesses (too many bad habits). The larger the “mouth” of this funnel, the higher the probability you will get liquidated, leading to long-term losses, until it drains your last drop of blood!
2 Most people don’t realize this in the first place, until they lose and sink into mental despair, feel helpless in life—most people can no longer get back up. Only a very small number of people are able to rise from the ashes in a desperate comeback.
3 You can be slow, you can react slowly, you can have insufficient cognitive ability—these can all be improved gradually. There are many teachers across the internet. You just need to strengthen yourself; you can slowly catch up and fill the gaps. Retail traders are at the low latitude of the ecological hierarchy. With cognition, by no means think you have to reach top-tier cognition. Just 60–80 points, upper-middle level, is enough. Because for top-tier cognition, your information disadvantage and experience level can never reach that level—due to the固化 of your food chain layer. I think getting a pass mark is not a problem; improving a bit more is even better. With the rapid spread of the internet era and the policy stage “plugging leaks and filling gaps,” this thing has already been flattened, which is actually more favorable for ordinary retail traders.
4 Reaching the average level of cognition is enough; the rest is execution ability. The key issue is execution. Put simply, it’s about the “b” points. The problem is precisely that this “b” is the most important. The “b” point and the market tempo must match; then you’ll have a high probability of positive feedback and a virtuous cycle. Commonly known as: the more money you make, the better the rhythm; the steadier the mindset. The more money you lose, the worse the rhythm, and the uglier your mindset and mental outlook. When a negative cycle accumulates to a certain degree, it will expand the losses.
5 Based on the situation above, give a model for a short-term trader within one month:
1 Worst model: “b” point problems are big + mindset rhythm easily breaks you (bad habits are especially many, how bad depends). People like this often start losing as early as the beginning of the month; halfway through, the losses grow bigger. They fantasize about breaking even—losing more means losing even more. As long as you are down -10 or worse that month, basically the month is done. Not only can you not get back to even, you may continue to expand the losses. (I define this person’s model as: a stock-distribution sell-off order book scenario—weak opening at the auction/low-open, weak follow-through. The intraday moving averages step down one level after another, until a large bearish candle. The next day’s low-open and negative feedback expectation remains big.) The next month repeats the same pattern.
2 A model that can still be salvaged: You have the correct ability at the “b” point, but your mindset and rhythm are poor. When you make money, you don’t know how to manage risk; desire grows, and you don’t hit the brakes. When you lose, you break down, and you play “Plan B”—making subjective calculations based on the rotation repair of silicon-based bio; or you go along with it by chasing from the sidelines, or you low-buy inside what’s weak. The outcome often brings even larger losses the next day. This person’s monthly results model is either: maintaining a range-bound pattern—no loss, no win (your equity curve bounces around within a range up and down); or range-bound turns into a decline (a breakdown alone is enough to force your curve to range-bound → downtrend, producing a big loss curve).
3 Best model: “b” point correctness and timing/rhythm are high-quality or relatively high-quality. The short board in the barrel effect and the funnel’s leak are both small. The opening (inlet) caliber and flow speed are far greater than the opening (outlet) caliber and flow speed. Your curve must be a stable, bulldozer-style upward oscillation, with steady compounding. Define it as a “strong repair order-book” model, or an “upward oscillation” order-book model.
6 By the description in item 5, everyone should be able to feel what kind of player they are and where the problems show up. What is the essence of the problem? First, having at least a passing level of cognitive ability is the foundation. This isn’t hard—learning is the simplest thing in real society. On top of that, if you build stable “b”-point rhythm that is correct + stability in your own mindset and rhythm (if the barrel effect short board and funnel effect leaks can be shrunk as much as possible—having no issues at all is impossible), then the dual-core driven positive cycle is the long-term winning path for short-term trading talents.
7 I don’t want to talk much about the “s” point. Making money means the trades are right—there’s more than one stock and more than one opportunity in the market. So only when the “b” point isn’t correct + the short board is too big is it a grave! Whether it’s a big V in the stock forum (股吧) or a newer up-and-comer, there aren’t many people talking about these things. I really can’t watch it anymore—so I’ll say a few more! If you have a sincere heart and we’re fated, please give a like and a tip/thank-you is enough. No need to cheer!