A Letter to Short-Term Traders

1 Short-term trading markets are basically a barrel-hoop effect. Your goal is to use a bulldozer to achieve long-term, stable compounding returns. Whether you can do that doesn’t depend on your strong points—it depends on your weak points (too many bad habits). The wider the mouth of this funnel is, the higher the probability that you’ll get terminated (cancel your account), and you’ll lose over the long run, until you’re drained of your last drop of blood!

2 Most people actually don’t realize this until they’re losing and fall into spiritual despair, life feels helpless, and most people can no longer get back up—only a very small number of people are able to rise again from the brink.

3 You can be slow, you can react slowly, you can have insufficient cognitive ability—either way, you can gradually strengthen those things. There are a lot of teachers across the whole network. As long as you improve slowly, you can make up for it. Retail traders are at the low-dimensional level in the ecosystem hierarchy. With “cognition,” don’t ever think you have to reach top-tier cognition. Just get to 60–80 points, which is good enough. Because with top-tier cognition, your information gap and experience points are forever impossible to catch up to. It’s due to your food chain level being固ified. I think passing is not a problem; improving a bit more is even better. With the rapid spread in the internet era and the policy stage’s ongoing leak-sealing and gap-filling, this thing has already been flattened, which is actually more favorable for ordinary retail traders.

4 Reaching an average level of cognition is enough; the rest is execution ability. The key issue is execution. Put simply, it’s about the BS point. And the problem is precisely that this “b” is the most important. The b point and the market’s timing must match. Then you get positive feedback—your probability of a virtuous cycle is high. Commonly known as: the more you make money, the better the trading rhythm, and the steadier your mindset. The more you lose money, the worse the trading rhythm, and the worse your mindset and mental state become. Once negative cycles accumulate to a certain level, they expand losses.

5 Based on the situation above, give a model for a short-term trader within one month:

1 Worst model: a lot of issues with the b point + the mindset/rhythm is easy to break down (with especially many bad habits). People like this often start losing right from the beginning of the month; during the middle, they lose even more; they fantasize about breaking even—losing more and more. As long as you’re down more than -10 that month, basically the month is done. Not only can you not break even, but you may continue to expand your losses. (I define this person’s model as an individual-stock distribution exit—low opening at the auction with weak follow-through. The intraday moving averages step up one level at a time, until a big bearish candle. The next day’s low open also keeps a negative feedback expectation.) The following month repeats the same pattern.

2 A salvageable model: You have the correct capability for the b point, but your mindset/rhythm is poor. When you make money, you don’t know risk; desire becomes bigger and you don’t hit the brakes. When you lose, you break down. You play “second best.” Your subjective calculations can trigger a silicon-based biological rotation repair—trying to accompany the ride—or you buy the weak names with low entries. The results often come with even bigger losses the next day. This person’s month-end performance model is either: maintaining a sideways range—no loss, no win, moving chaotically within the curve up and down; or: the sideways range turning into a downturn (one breakdown is enough to turn a sideways-to-downward curve into a large-loss curve).

3 Best model: High-quality—or relatively high-quality—b point correctness and timing. The barrel’s short board and the funnel’s leak are both very small. The cross-section and flow rate of the inflow side are far greater than those of the outflow side. Your curve must be a sideways-and-upward grind. Bulldozer-style stable compounding. Define it as a “strong repair order book” or a “sideways-to-upward” order book.

6 Through the description in point 5, everyone should be able to feel what kind of player they are and where the problems occur. 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: correct b-point timing + stable mindset/rhythm stability (if the barrel-effect short board and funnel-effect leak are shrunk as much as possible, having zero problems is also impossible), then the dual-core driver of positive feedback cycles is the long-term winning path for short-term trading talents.

7 About the s point, I don’t want to talk more. Making money means everything is correct. There’s more than one stock in the market, and more than one opportunity. So it’s the b point being incorrect + the weak points being too large that’s the grave! Whether it’s a big V in a stock forum or newer elites, not many people go into these things. I really can’t watch it anymore, so I’ll say a few more! If you’re sincere, if you’re destined—please like and you can give some rewards as well. No need to cheer!