Source: Red and Green As centralized investors, our goal is to have a greater understanding of our companies than any Wall Street investor. If we are willing to work hard and learn as much as possible about our companies, we are likely to know more than general investors, which is all we need to gain a competitive advantage. On the product structure side, the operating income of products worth 10-30 billion yuan is 401/1288/60 million yuan, respectively, in 2023, the overall sales volume of the company reached 18,000 kiloliters, a year-on-year increase of 28.10%, showing significant growth.

1. There is no bible in trading. There Is No Holy Grail in Trading

Many traders mistakenly believe that there is one method to explain market behavior. However, there is no investment philosophy that works forever. As described in this book, every trader has their own investment philosophy.

2. Find a trading method that fits your personality.

Traders (investors) must find methods that suit their talents and beliefs. Some methods that work for one person may be wrong for another. Because everyone is different.

3. Trade within your comfort zone.

Sometimes, when the position is too heavy, any adjustment will lead to an early sell. One must trade in a comfortable position and field, and not let emotions overly influence trades.

4. Flexibility is an essential quality for trading success.

Very successful traders not only sell their positions after realizing mistakes, they even short sell. Investing is not about stubbornness, but the ability to adapt.

5. The need to adapt.

If you can find a suitable investment strategy and adhere to trading discipline, that's great. However, the real world is not like that. The market is constantly changing, and your investment strategy may slowly become ineffective. This requires us to adapt to the market.

6. Don’t confuse the concepts of winning and losing trades with good and bad trades.

A good investment strategy can lose money, and a bad trade can make money. Even the best trading strategies will lose money at times. Do not confuse the effectiveness or ineffectiveness of trading strategies with luck.

7. Do more of what works and less of what doesn’t.

Engage in trades where you have an advantage and capability. Do not engage in those outside your range of ability.

If you are out of sync with the markets, trying harder won't help.

Sometimes when you are consistently losing money, trying harder may worsen the situation. If you are continuously losing money, the best action is to step away from the market for a while.

The road to success is paved with mistakes.

Learning from mistakes is a crucial factor in achieving ultimate success.

Wait for trades that you have high conviction in.

Investing requires patience; wait for the opportunity that feels the best to you.

Trade because of perceived opportunities, not out of a desire to make money.

When you are just anxious to make money and engage in buying and selling, you will ultimately not make a profit. The driving force behind your trade must be seeing a great opportunity.

12. The Importance of Doing Nothing.

When the market environment is poor, doing nothing and having patience is extremely important.

13. How a Trade Is Implemented Can Be More Important Than the Trade Itself.

A perfect example is shorting the nasdaq bubble. Many people identified this bubble, but how to execute is far more important than the idea of the trade itself.

14. Trading Around a Position Can Be Beneficial.

Trading is not just about buying stocks and selling stocks in two steps. Trading is multidimensional and requires dynamic control of positions.

15. Position Size Can Be More Important Than the Entry Price.

Having too many positions may sometimes lead to good trades being sold off too early due to fear. When opportunities outweigh risks, increasing positions is also the core of investors earning excess returns.

16. Determining the Trade Size.

Determine the trade size using the Kelly formula.

17. Vary Market Exposure Based on Opportunities.

The exposure in the market, even the direction, should be determined by the value of the opportunities.

18. Seek an Asymmetric Return/Risk Profile.

Look for trades where the risk is limited but the upside is substantial.

19. Beware of Trades Born of Euphoria.

An increase in market volatility is often a sign of a market peak, so caution is needed.

If the market's volatility increases in your favor, you need to heed the advice. If you are on the right side of euphoria or panic, listen up.

A market peak often begins with a significant drop.

Staring at the screen all day can be expensive.

Staring at the screen all day can lead to excessively frequent trades, which is of no help to oneself.

You may have heard it a hundred times, but remember: controlling risk is critical. Just because you’ve heard it 100 times doesn’t make it less important: risk control is critical.

In each trade, set risk control points, and overall position exposure should also control risk. A single mistake could lead to everything being lost.

Don’t try to be 100 percent right.

Everyone makes mistakes and should understand when they are wrong, and not be too stubborn.

24. Protective stops must be consistent with the trade analysis.

Many traders set their stop losses at levels they think they cannot tolerate, rather than based on the trade analysis itself.

25. Constraining monthly losses is only a good idea if it is consistent with the trading strategy.

For long-term investors, constraining monthly losses may not be beneficial and must be consistent with the long-term trading strategy.

26. The power of diversification.

Diversification may be the holy grail of investing; seek out assets that are uncorrelated.

27. Correlation can be misleading.

Sometimes correlation represents past relationships rather than future ones.

28. Price fluctuations in related markets can sometimes provide important trading clues.

Sometimes certain markets lead another market or move in the opposite direction.

29. Markets behave differently in different environments.

Any program that looks at economic variables and price indices through algo indicators will lead to failure, because market reactions are completely different in different environments.

30. Pay attention to how the market responds to news.

When the market's response to news differs from expectations, the information itself becomes more significant.

31. Major fundamental events can sometimes lead to opposite price running trajectories.

Sometimes when significant fundamental information has already been fully anticipated, the market may move in the opposite direction when it actually occurs.

However, when stock prices diverge significantly from fundamentals, it often presents the greatest opportunity to buy options. Situations characterized by the potential for a widely divergent binary outcome can often provide excellent buying opportunities in options.

Options are much more elastic than the underlying stocks, and when stock prices significantly diverge from fundamentals, buying options offers a higher return.

A stock can continue to rise significantly after a large increase. A stock can be well-priced even if it has already gone up a lot.

Many people miss out on great opportunities simply because stock prices have already risen a lot. What matters is not how much the stock price has increased, but how much expectation for the future it contains.

Don't make trading decisions based on where you bought or sold a stock.

The market does not care where you established your position.

Potential new revenue sources that are more than a year out may not be reflected in the current stock price.

Income growth after one year is often not a major focus of the market at present.

36. Value investing is feasible. Value Investing Works.

From the perspective of long-term investment returns, value investing is very feasible, although it may not always perform well in the short term.

37. The efficient market theory provides an inaccurate model of how the market is really running.

Prices will not always hover around the correct value; sometimes they will be high, and sometimes they will be low. It is necessary to capture market inefficiencies caused by emotions.

38. It is usually a mistake for a manager to alter investment decisions or the investment process to better fit investor demands.

If a fund manager is led by his investors, it is destined for failure.

39. Volatility and risk are not synonymous.

Low volatility does not mean low risk, and high volatility does not indicate high risk.

It is a mistake to select fund managers based solely on past performance.

Many fund managers perform well because their style suits that particular market. If selected based on their past excellent performance, they may not perform well if their style changes in the future.

Editor / jayden