Stop relying on luck to trade! The world’s four major trading schools—there’s always one that suits you 🎓
Many friends ask me: what exactly makes money in trading? Luck can only win you a little while; a system can win you for life. Truly mature traders all have their own trading systems. Today, let’s take a look at the world’s four major trading schools 👇
📊 1. Fundamental Analysis: Value Will Eventually Return
Core belief: Market prices fluctuate around intrinsic value over the long term. They may deviate in the short term, but they will eventually return.
What to focus on? GDP, CPI, interest rate policy, corporate earnings reports, industry cycles, geopolitics—only by studying these “hard data” thoroughly can you understand the true value of assets.
Two classic branches:
🔹 Value investing: Look for undervalued assets and hold them long term. Representatives: Buffett, Graham.
🔹 Global macro: Trade across asset classes based on the economic cycles of different countries. Representatives: Soros, Dalio.
Who is it for: medium- to long-term traders. For retail investors, the most beginner-friendly way is still to learn from Buffett and buy individual stocks—no expiration date, no leverage, no rollover, able to endure and able to afford to endure.
📈 2. Technical Analysis: The Market Encompasses Everything
Core belief: Market behavior discounts everything, and prices evolve in trends. Everything is hidden in candlesticks.
Many branches:
🔹 Candlestick school: Analyze the balance of bullish and bearish forces
🔹 Indicator school: Use MACD, RSI, KDJ, Bollinger Bands to judge overbought and oversold conditions
🔹 Trendline school: Use trend lines, channel lines, and Fibonacci retracement to find support and resistance
🔹 Pattern school: Head and shoulders, double top, double bottom to predict the future
🔹 Wave school: Elliott Wave Theory, 5 upward waves + 3 downward waves
Key philosophy: Technical traders must “cut losses short and let profits run.” Stop-loss is the lifeline—strict risk control allows winning trades to develop fully and capture big swings.
🧠 3. Behavioral Finance and Psychological Contrarianism: Predicting Your Prediction
Core belief: Greed, fear, overconfidence, herd mentality—these human weaknesses are the strongest variables affecting prices.
The logic is harsh: most people are wrong at market turning points. Use the crowd’s systematic cognitive biases to buy when pessimism is extreme and sell when optimism is extreme.
Signals to watch: VIX fear index, retail positioning ratio, fear-and-greed indicators... I recommend reading Daniel Kahneman to understand human nature so you can use it in reverse.
💻 4. Quantitative Trading: Trust Data Only, Not Causality
Core belief: Replace subjective human judgment with mathematical models and computer programs. Only statistics, no storytelling—if the data shows that stocks tend to rise on rainy days, then buy, regardless of why.
Main approaches:
🔹 Momentum strategy: The academic version of chasing strength and selling weakness
🔹 Statistical arbitrage: Find price spread mean reversion among correlated assets
🔹 Market neutral: Strip out Beta and earn only Alpha
🔹 High-frequency trading: Order-flow sniping at the microsecond level
Can retail traders get in? The barrier is high. It’s recommended to start by combining “discretionary + model,” build a small model first, and use a low- to mid-frequency swing strategy—trading once every few days. In fact, grid trading and smart conditional orders are already basic quant methods.
🎯 Summary
Four schools, four ways of looking at the market:
Fundamental school — price will eventually return to value
Technical school — where price is going
Psychological school — human weakness
Quantitative school — data and algorithms
There’s no hierarchy of better or worse; if you study them well, all can be profitable. But before putting in the hard work, you must first figure out which path suits you. Don’t spend half your life training leg techniques only to insist on entering a boxing ring—that would be going off track 😂
Find your school, build your system, and the rest is just a matter of time.
Many friends ask me: what exactly makes money in trading? Luck can only win you a little while; a system can win you for life. Truly mature traders all have their own trading systems. Today, let’s take a look at the world’s four major trading schools 👇
📊 1. Fundamental Analysis: Value Will Eventually Return
Core belief: Market prices fluctuate around intrinsic value over the long term. They may deviate in the short term, but they will eventually return.
What to focus on? GDP, CPI, interest rate policy, corporate earnings reports, industry cycles, geopolitics—only by studying these “hard data” thoroughly can you understand the true value of assets.
Two classic branches:
🔹 Value investing: Look for undervalued assets and hold them long term. Representatives: Buffett, Graham.
🔹 Global macro: Trade across asset classes based on the economic cycles of different countries. Representatives: Soros, Dalio.
Who is it for: medium- to long-term traders. For retail investors, the most beginner-friendly way is still to learn from Buffett and buy individual stocks—no expiration date, no leverage, no rollover, able to endure and able to afford to endure.
📈 2. Technical Analysis: The Market Encompasses Everything
Core belief: Market behavior discounts everything, and prices evolve in trends. Everything is hidden in candlesticks.
Many branches:
🔹 Candlestick school: Analyze the balance of bullish and bearish forces
🔹 Indicator school: Use MACD, RSI, KDJ, Bollinger Bands to judge overbought and oversold conditions
🔹 Trendline school: Use trend lines, channel lines, and Fibonacci retracement to find support and resistance
🔹 Pattern school: Head and shoulders, double top, double bottom to predict the future
🔹 Wave school: Elliott Wave Theory, 5 upward waves + 3 downward waves
Key philosophy: Technical traders must “cut losses short and let profits run.” Stop-loss is the lifeline—strict risk control allows winning trades to develop fully and capture big swings.
🧠 3. Behavioral Finance and Psychological Contrarianism: Predicting Your Prediction
Core belief: Greed, fear, overconfidence, herd mentality—these human weaknesses are the strongest variables affecting prices.
The logic is harsh: most people are wrong at market turning points. Use the crowd’s systematic cognitive biases to buy when pessimism is extreme and sell when optimism is extreme.
Signals to watch: VIX fear index, retail positioning ratio, fear-and-greed indicators... I recommend reading Daniel Kahneman to understand human nature so you can use it in reverse.
💻 4. Quantitative Trading: Trust Data Only, Not Causality
Core belief: Replace subjective human judgment with mathematical models and computer programs. Only statistics, no storytelling—if the data shows that stocks tend to rise on rainy days, then buy, regardless of why.
Main approaches:
🔹 Momentum strategy: The academic version of chasing strength and selling weakness
🔹 Statistical arbitrage: Find price spread mean reversion among correlated assets
🔹 Market neutral: Strip out Beta and earn only Alpha
🔹 High-frequency trading: Order-flow sniping at the microsecond level
Can retail traders get in? The barrier is high. It’s recommended to start by combining “discretionary + model,” build a small model first, and use a low- to mid-frequency swing strategy—trading once every few days. In fact, grid trading and smart conditional orders are already basic quant methods.
🎯 Summary
Four schools, four ways of looking at the market:
Fundamental school — price will eventually return to value
Technical school — where price is going
Psychological school — human weakness
Quantitative school — data and algorithms
There’s no hierarchy of better or worse; if you study them well, all can be profitable. But before putting in the hard work, you must first figure out which path suits you. Don’t spend half your life training leg techniques only to insist on entering a boxing ring—that would be going off track 😂
Find your school, build your system, and the rest is just a matter of time.