1. The role of human nature in investment cannot be overlooked.

Many investors, after reading a few investment books and gaining some financial knowledge, believe they have mastered the techniques of investing once they understand candlestick charts, moving averages, and some indicators, and then confidently prepare to make profits in the investment market. To my knowledge, there seems to be no top-tier investor globally who has achieved great success in the investment market solely through technical analysis! Even John Murphy, the pioneer of technical analysis, likely only taught techniques without addressing the role of human nature in the investment market. The highest-flying eagles rely not just on their wings but also on belief.

Technical analysis is a tool, merely a necessary condition for investment success, not a sufficient one. Overemphasizing the pursuit of technical tools can lead to neglecting certain aspects of 'philosophy.' How to continue stable survival amidst the turbulent waves of speculation? How to understand the strengths and weaknesses of investors, reasonably plan investment strategies, and act according to circumstances? In order to explore the path to speculative survival in the investment market, and soar higher and farther like an eagle in the investment world, we need to discuss technical analysis, capital management, and the fundamental aspects of human nature that align with financial speculation.

Technical and fundamental analyses are not the essence of the issue. The correct investment philosophy, as well as the psychological qualities, knowledge structure, attitude towards life, breadth of mind, and courage of investors, are the key factors to investment success. Analyzing the market is secondary; understanding oneself is primary. Without an understanding of philosophy or methodology, or without a dialectical approach to analyzing the market, it is inevitable that investors will make blindly subjective judgments during the investment process. Even if one understands technical analysis, what will the result be? Blind subjectivity often marks the beginning of danger. Only by understanding oneself and feeling the pulse of the market can one remain undefeated in numerous battles. Sole reliance on technical analysis cannot help one feel the market, leading instead to constant wins and losses.

Although the confrontation of capital determines the direction of market trends, we must understand how prices are formed. Prices are the result of the collective behavior of all market participants, meaning prices are the outcome of human actions. Therefore, throughout the price formation process, human nature will inevitably be fully reflected. In trading, achieving 'clarity of mind and insight into one's true nature' may bring us closer to success.

Napoleon compared the various qualities of an excellent commander to a cube. The base of this cube refers to the commander’s bravery, tenacity, decisiveness, and other spiritual factors. The height represents the commander’s wisdom, including strategic foresight. He particularly emphasized that intelligence and bravery must develop equally in the commander's mental world to handle battlefield situations effectively.

Our Chinese nation has long been a thoughtful and strategically minded people, rich in wisdom. Our traditional culture has long pointed out that wisdom is the source of strategy, and strategy is the method of applying wisdom. Talking about strategy without wisdom, or focusing on wisdom without strategy, is akin to puppet theater—full of changes but incapable of solving real problems. When strategy reaches a level of mastery, wisdom will also be brought to its fullest potential.

Only when investment strategies are combined with psychological factors can we comfortably hold our positions without fearing a downturn when taking long positions or an upturn when taking short positions. The fluctuations of the market should be carefully considered before placing orders. Placing an order is the result of thorough deliberation, not something to fear afterward. Victorious soldiers win first and then seek battle; defeated soldiers fight first and then seek victory. Market fluctuations do not change based on whether we fear them after placing an order. So why not face them calmly? Stop losses at the stop-loss point and take profits at the profit-taking point. Beyond that, we should observe market movements with detachment, preparing a well-thought-out strategy for the next investment move.

2. Investors' Military 'Rank' Advancement

Market conditions are complex and unpredictable. Amidst volatile prices, we must act like soldiers in a military campaign. Successful investors resemble accomplished generals skilled in warfare. They must understand how to formulate operational plans, determine directions of movement, and devise war strategies. Additionally, they must know how to deploy resources and maintain balanced offense and defense to achieve victory. Bravery without strategy leads to death on the battlefield, while strategy without bravery makes progress impossible.

In the battlefield of investment, achieving victory requires formulating strategies based on observing trends to ensure both offensive and defensive actions are well-grounded. Success not only depends on favorable timing, geographical advantages, and harmonious teamwork but also on the proper application of strategies. Each investment decision should draw lessons from others' successes and failures as well as one’s own past experiences in real-world scenarios, honing courage under pressure before making decisions. Otherwise, opportunities cannot be effectively seized, nor can victories be achieved with fewer resources or unconventional tactics. This would contradict the principle of leveraging small investments for significant gains.

Investors must continually engage in the market, experience its environment, and summarize lessons to grow from novices into qualified participants. After undergoing numerous battles of varying scales, they gradually advance through ranks—from squad leader to platoon leader, company commander, battalion chief, regiment head, up to senior commanders. The basic requirements for a soldier include proficient use of individual combat tactics, strict obedience to orders, and demonstrating bravery during battles. Company-level leaders focus primarily on tactical execution.

At the regimental level, individuals possess substantial operational experience and lead medium-sized teams. They recognize their role as a critical component within larger campaigns and consider issues from a holistic perspective. In financial markets, these investors manage funds ranging from several million to tens of millions, mastering a trading system refined over years of practical testing and applying it to its fullest potential.

During operations, they achieve fluidity between action and intention, entering or exiting positions with ease. They accurately assess market movements and understand that investment is a unique field differing from other industries in terms of success logic. Their thinking diverges significantly from most investors because they rely on principles and philosophies to guide transactions. Years of experience have strengthened their psychological resilience, enhancing personal virtues such as patience, broad-mindedness, and boldness.

They focus on allocating capital across different asset classes, identifying opportunities in both long-term and short-term strategies, building high-performing investment teams, assigning roles effectively, and addressing team members’ mindsets. These individuals can plan and execute medium-scale investment campaigns with considerable likelihood of success. Only a select few investors reach this level in the market, and many remain at this stage without breaking through further developmental barriers.

When ascending to the rank of army group commander, strategic considerations take precedence. Market intelligence may begin two years prior to conflict. Commanders evaluate situations involving both allies and adversaries, considering cultural nuances, economic climates, foreign exchange reserves, monetary policies, national strategies, and diplomatic relations. They oversee multi-faceted offensive and defensive systems, directing battles remotely while focusing on appointing regional commanders and coordinating land, sea, and air forces.

For instance, Soros successfully targeted the Bank of England, triggered Thailand's economic crisis, and instigated Hong Kong's 1997 financial turmoil using multidimensional attack strategies. By exploiting correlations among three or more financial instruments, he engaged in speculative activities after meticulous preparation. In May 1997, Quantum Fund, alongside Western hedge funds, launched simultaneous assaults on Thailand’s currency, stock market, and index futures markets.

The Central Bank of Thailand mobilized all available resources to counter Soros’s offensive in what became known as the Thai Financial Counterattack. Ultimately, Thailand suffered a loss of $32 billion in foreign exchange reserves and conceded defeat. When targeting the British pound, Soros acted opportunistically; against the Thai baht, he exposed underlying economic bubbles. These financial campaigns transcended mere technical analysis.

Success comes at great cost: reaching the rank of army group commander might occur once in 100,000 attempts. Not every investor progresses steadily from soldier to higher ranks. Many newcomers cannot endure the unique pressures of the battlefield. Even if some survive initial skirmishes, subsequent engagements diminish their numbers until most meet an honorable demise. A smaller group, recognizing bleak prospects, retreats from the market to pursue alternative careers. Others transition from professional investing to sporadic participation amidst other responsibilities.

Those who remain exhibit sharp reflexes, unwavering determination, and independent analytical abilities—the elite few destined to become regiment leaders. Their sole belief is perseverance despite injury, fighting until their last breath. Though battered, they persist and adhere strictly to survival rules learned on the battlefield. In investment warfare, even minor changes prompt intuitive responses—initiating attacks or retreating swiftly based on observed signals. They rapidly devise plans for opening positions, managing losses, and handling adversity.

Veterans can determine the location of enemy fire points based on the terrain during missions. If no counterattack is encountered where it should have occurred, it indicates that the opponent is well-prepared or harbors a larger scheme. What awaits us may be a trap. We might have fallen into an ambush. At key resistance levels, support levels, golden ratio levels, and important moving average positions, such situations could arise at any time.

This requires our special attention during operations. Suffering numerous scars is painful, but for someone striving for success, these scars represent capital—capital that appears all the better the earlier it emerges. Investment requires not only ideals, passion, and a spirit of dedication, but also wisdom, strategy, and insight.

III. Cultivating Execution Ability in Investment Practice

Some individuals experience many setbacks in investment practice. They place great hope in training to achieve short-term wealth through rapid gains to compensate for past losses. Such aspirations are unlikely to be realized. Even highly successful investors cannot win every battle; rather, they adhere to an investment plan and remain faithful to a set of principles and methods. They strictly observe discipline, overcome fear and greed, and thoroughly grasp risk versus reward.

A good set of principles and methods can be learned in three days, but mastering them is difficult despite their apparent simplicity, as human nature cannot be altered within three days! A solid method represents accumulated experience that requires time for validation. One minute on stage reflects three years of effort behind the scenes. Wang Xizhi could produce a masterpiece of calligraphy in three minutes, but that was the concentrated essence of writing through eighteen inkpots and decades of practice. Training can only enrich investors' thinking theoretically and methodologically, enhance their understanding of the market, shorten their path to success, and help them avoid unnecessary detours. Training under correct guidance can minimize avoidable losses.

Investment is an art that connects theory with practice. The key factor lies in undergoing training and continuously practicing real-market operations after learning the correct methods to hone one’s practical skills and responsiveness, thereby improving trading proficiency. A journey of a thousand miles begins with a single step. Progress in learning investment does not depend on how far the goal is but on how much effort is made daily. Even dedicating one hour each day to operations followed by careful reflection will lead to profound market insights after a year.

Good methods are validated over time and summarized through practice. Hoping to become rich quickly via short-term training is as laughable as expecting to become a group army commander immediately after graduating from a military academy (referring to the early Huangpu Military Academy, not modern academies). Graduates start as second lieutenants leading platoons. Their combat abilities improve through the test of war, and they advance by achieving results through their own efforts.

At the most critical moments of war, those who make the greatest contributions may be promoted three ranks at once, becoming majors commanding battalions. At this point, the units they lead receive special attention. Whenever a tough opponent arises, leadership thinks of them first.

Investors who undergo training can reach the level of advisors. While they may assist regiment commanders in planning warfare, they lack practical combat experience and are unable to independently lead troops into battle. Despite holding the rank of captain or major, if they wish to lead troops personally, they must first serve in a deputy role within departments corresponding to their rank for further training. Only after gaining experience and achievements can they transition into a formal leadership position capable of making decisions.

Graduate students in financial investment from higher education institutions undoubtedly enter the investment market with the rank equivalent to majors, possessing abundant theoretical knowledge but lacking practical combat ability. They should begin by joining large investment firms for training, starting as advisors and writing market analysis reports. There are two paths for promotion: excelling in their current role to advance to the rank of chief advisor, becoming professional analysts.

There is another path where individuals gradually rise to become senior military leaders under the guidance of team leaders and through practical experience. The former approach is relatively easy, while the latter is equally arduous. The biggest difference between advisors and decision-makers lies in the fact that advisors offer suggestions without bearing risks, whereas decision-makers take action and assume responsibility. Therefore, being a decision-maker is more challenging. Cao Cao had hundreds of strategists, but only he himself was the ultimate decision-maker. In the investment market, learning how to analyze, boost one’s courage, and apply various investment strategies marks just the beginning of mastering the 'way.'

The high risks in the market amplify fear to its limits, so successful traders must surpass ordinary individuals psychologically. Personality determines the fate of investors, and ultimately, success or failure in investing hinges on one’s character—whether one can remain fearful when others are greedy and be greedy when others are fearful. In the investment market, truth always rests in the hands of the minority. However, due to a lack of confidence, even though one knows they are acting against the crowd and doing the right thing, they are often still influenced by herd behavior. Hence, the primary factors determining success or failure in investments are rooted in an individual's life philosophy, attitude, mindset, cultivation, and level of insight, all of which eventually translate into execution capabilities.

IV. Capital preservation is more important than appreciation in investing.

In the investment market, capital preservation is more crucial than appreciation, much like in warfare. Rushing to capture a useless prisoner at the expense of one’s own life violates the survival principles of the battlefield: protect yourself first before eliminating the enemy. Failing to safeguard oneself goes against these survival rules. In the capital markets, cash is king. Whenever investors harbor doubts about the market, they should shift to holding cash.

Capital is the lifeline of investors, and the application of capital management and skills directly affects an investor's state of survival. Anything can happen in the investment market, so prudence is essential. Prudence does not equate to timidity but represents a tactical approach. Preserving strength in any situation leaves room for future success. Losing capital means losing the right to survive in the market. Success does not depend on luck or intelligence alone; achieving it requires the right mindset—knowing when to advance and when to retreat, and taking appropriate actions at the right time.

Investment, like other endeavors, follows intrinsic patterns, which involve learning to follow trends and leveraging them to secure victories. Those who align with the trend thrive, while those who defy it perish. During trading, one must trade in accordance with the trend. When investments align with the trend, money will flow continuously into one’s pocket. Conversely, defying the trend results in more losses than gains, no matter how intelligent or hardworking the investor may be. As the saying goes, even the wisest may err, and the foolish may occasionally succeed. While markets change, the principle of following trends remains constant—it simply varies in terms of timing. Adapting unchanging rules to a changing market requires gradual understanding, familiarity, and application. Under the influence of trend-following trading, clear thinking paired with adequate capital, along with risk management, strict discipline, and the courage to cut losses, can resist the temptation of profit-taking. This forms the foundation for success, although it does not necessarily lead to becoming a major investor.

Many people know what it takes to succeed in the investment market but fail to act accordingly. Their inability to align knowledge with action suggests they do not truly desire success. Obstacles to success include investors failing to thoroughly understand the various factors influencing a product before blindly proceeding with operations. Alternatively, some excessively favor short-term trading, frequently earning small profits, which they mistakenly label as a “guerrilla strategy.” However, short-term trading rarely yields substantial returns. Even after ten consecutive profitable trades, one careless loss can erase all prior gains.

While such frequent wins may bring temporary satisfaction, one careless loss can wipe out the earnings from ten successful trades. Frequent trading often lacks careful consideration, significantly increasing the likelihood of errors. Each trade incurs transaction costs, and eventually, what was intended as a “guerrilla strategy” devolves into a “war of attrition.” Guerrilla tactics suit only a select few with exceptional talent and specialized training, whose accuracy exceeds 80%. However, such naturally gifted investors are rare. For the majority, it is best to avoid relying on this investment strategy.

From the perspective of capital management as a key to success, profitable positions should be larger during winning streaks, while losing positions should be smaller. Alternatively, trend trading can capitalize on price movements to achieve success. The challenge lies in position sizing. For medium- to long-term or swing trades, we can start with exploratory positions. “Hold long if aligned, short if divergent”—if market trends align with our position, we can hold for longer durations.

This creates opportunities to increase position sizes, aligning with the principle of maximizing profitable positions. How can short-term trading achieve large profitable positions? If the market moves against our position, we must immediately exit to minimize losses. Our profits should outweigh losses—earning substantial gains when winning and minimal losses when losing. Achieving maximum profits with minimal risk is the optimal strategy for wealth accumulation in futures trading. Though success is possible, this alone does not guarantee becoming a major investor.

Another factor that hinders investors' success is that most investors want to win but are afraid of losing. Under the influence of this mentality, their emotions fluctuate with market movements, often leading to irrational actions. On the battlefield, only those who are unafraid of death deserve to live. The investment market is a process of alternating joy and sorrow; do not rejoice in gains or despair in losses. In the investment market, the more fearful of loss one is, the more prone to losses they become. Personality flaws can act as a trigger for losses in the market, which are an inseparable part of investment life, essentially constituting transaction costs. Every business involves cost inputs.

In the market, some degree of risk-taking is necessary. Without the adventurous spirit required to become a general, there will be no courage to transition from failure to success. In reality, if one mentally prepares to accept a potential loss of 10%, they can engage in investments with peace of mind and a sense of ease, reducing fear when facing investments. Instead, they may find the joy of success. Those who fail to fully understand market risks cannot fully appreciate the pleasures of leveraging the market.

The 'Wu Qi Military Methods' proposed the governance principle of balancing civil and military approaches, emphasizing internal cultivation of cultural virtues while externally preparing for military readiness. It requires commanding officers to embody both literary and martial qualities, integrating strength and gentleness, and meeting five cautious conditions: reason, preparation, decisiveness, and restraint. In warfare, one must master four elements: timing, terrain, external factors, and power dynamics. The text advocates assessing the enemy's strengths and weaknesses to exploit vulnerabilities, seizing favorable opportunities to attack in order to secure victory.

Adopting corresponding strategies based on battlefield conditions, in investment practice, we must learn to evaluate the market using dialectical thinking. Analyze trends from multiple perspectives, including bullish and bearish outlooks as well as retail investor behavior. Distinguish between trading opportunities and non-opportunities, identifying low-risk, high-reward prospects. Patiently wait for the right trading opportunity. In investing, timing matters more than correctness. When the situation is unfavorable, exercise patience; when encountering low-risk, high-return opportunities, act decisively!

5. Capital preservation is more important than appreciation in investing.

If investors have not succeeded within three years of entering the investment market, the failure likely stems from their mindset. To advance from being a retail investor to a major player, one’s mindset and character are key determinants of success. Individuals with the temperament of top-tier investors resemble lions or tigers. They understand major trends, follow them closely, and know how to profit from them. They endure solitude and value rest. Great opportunities do not present themselves daily; only those who understand the importance of rest can seize significant chances and demonstrate true wisdom. Philosophy forms the foundation, technique sets the standard, execution is critical, analysis must be rational, and operations should be appropriate. Success comes only through understanding and practicing these principles.

The entire process of achieving success in investing involves accumulating experience and altering one’s attitude toward life. However, only by transforming one’s character and ensuring consistent application of techniques and methods can one change their destiny. Cultivating the mind takes precedence, followed by technical skills—when the mind is clear, everything falls into place.

Through my experiences, I hope to help investors recognize the most crucial aspects of investing, broaden their perspectives, and open their hearts. My goal is to inspire motivation, provide challenges, and foster transformation. In the investment market, strive to become an exceptional individual who stands apart from the crowd.

Looking to pick stocks or analyze them? Want to know the opportunities and risks in your portfolio? For all investment-related questions,just ask Futubull AI!

Editor/joryn