1. Core understanding of professional traders
1. The market is always right; prices reflect all information, do not go against the market.
2. Retail investors pursue 'predicting correctly', while institutions pursue 'probability advantage + risk control'.
3. Trading is not about working hard to get rich; the more frequent the trading, the easier it is to lose money.
4. The goal of professional traders: long-term stability, not short-term windfalls.
5. The key to profit is not IQ, but rules, discipline, and execution.
6. Do not trade with living expenses or borrowed funds; only use spare money.
7. The market does not owe you money; losses are your own issue, do not blame the market or the operators.
8. All the masters lose small amounts of money and make big amounts of money, not that they never lose money.
II. A complete trading system
9. Every transaction must include:
◦ Entry conditions
◦ Stop-loss position
◦ Profit Target
◦ Position size
None of them can be missing.
10. Only pursue opportunities with a high risk-reward ratio, at least 1:2 or higher.
A risk level of 1 and a profit level of at least 2 are required for it to be worthwhile to enter the market.
11. Trend Priority: Follow the major trend and focus on minor structures; do not try to catch the bottom or top against the trend.
12. Only act at key levels: support, resistance, breakout, and pullback.
13. Don't trade if you don't understand the market, and stay out of the market if you don't have an advantage.
III. Core of Technical Analysis
14. K-lines are essentially a reflection of capital flows: bullish candlesticks indicate strong buying pressure, while bearish candlesticks indicate strong selling pressure.
A long upper shadow indicates resistance, while a long lower shadow indicates support.
15. Support and Resistance:
If prices can't fall further, that's support; if prices can't rise further, that's resistance.
A breakout above resistance turns it into support; a drop below support turns it into resistance.
16. Trading volume is the most accurate indicator:
◦ Increased volume during price rises and decreased volume during price falls = Healthy price increases
◦ Decreasing volume during price increases and increasing volume during price decreases = False price surge
High volume at high prices without price increase = Major players distributing their holdings.
◦ Sustained low-volume trading = impending market reversal
17. Moving averages represent the average market cost:
Online bullish, offline bearish;
When moving averages converge and then diverge, it's a signal of a major market move.
18. True and False Breakthroughs:
A true breakout = increased volume + sustained price action + pullback without breaking the support level;
A false breakout = low volume + surge followed by a pullback + long upper shadow.
It's safer to wait for a pullback and confirmation rather than chasing rapid price increases.
IV. Position and Risk Management
19. Risk control is always the top priority; without risk control, all technical skills amount to nothing.
20. Limit any single loss to 1% to 2% of total capital.
21. Never fully invest or go all in; build positions in batches and exit in batches.
22. Set a stop-loss before entering the market; do not enter the market without a stop-loss.
Stop-loss orders should not be widened, moved, or held onto.
23. Cut your losses and let your profits run.
Small losses, big gains, guaranteed profits in the long run.
24. If you suffer two or three consecutive losses, take a mandatory break to review the trades and do not engage in retaliatory trading.
25. Withdraw a portion of your profits; do not put them all back into the market.
V. Smart Money and Market Structure
26. Four Stages of Smart Money (Institutional/Major Player) Behavior:
Accumulation → Consolidation → Price Increase → Distribution
27. Characteristics of accumulation:
The stock is consolidating at a low level, with negative news not causing a price drop, declining volume during price drops, moderate volume increases during positive days, and concentrated shareholding.
28. Characteristics of a wash-out:
A rapid pullback, low volume, shallow drop, quick rebound, scaring away retail investors.
29. Characteristics of a price surge:
The price is steadily rising along the moving average, with shallow pullbacks, increasing volume during the rise, and news being released gradually.
30. Shipping characteristics:
High volume with stagnant price, numerous long upper shadows, abundant positive news, prices falling instead of rising, and loosening of shareholding structure.
31. The real major players do not violently pump and dump their shares; instead, they distribute them slowly.
VI. Trading Psychology and Emotions
32. The biggest enemy in trading is yourself: greed, fear, impatience, and a desire for revenge.
33. Don't be arrogant when you make a profit, and don't panic when you lose money. View each trade independently.
34. Do not let group chats, news, or FOMO influence your decision-making.
35. Accept losses; losses are part of trading, not failures.
36. Consistent execution of the system is more important than predicting market trends.
VII. Review and Long-Term Execution
37. Review three things every day:
◦ Whether entry was in accordance with the rules
◦ Whether to stop loss and take profit according to the rules
◦ Where can optimization be done?
38. Don't switch systems frequently; mastering simple rules by repeating them to perfection is the mark of a pro.
39. Trading is a marathon, not a sprint; surviving is more important than making a lot of money.
40. The ultimate core of professional trading:
Control risks, wait for opportunities, strictly implement, and repeat over a long period of time.
• Only look at the 4-hour candlestick chart
• Moving averages: MA7, MA30, MA99
• Enter the market when the price stabilizes above the 30-day moving average and volume increases.
• Exit if the price falls below the 30-day moving average and fails to recover.
• Buy on high volume during an upward trend; sell on high volume without a price increase.
• Whales withdrawing funds are bullish, while transfers to exchanges are bearish.
• Use small positions, trade in batches, avoid chasing highs, and don't hold onto losing positions.