Whipped by theory for ten years, I finally learned to listen to what the market says

Part One: The recent market conditions haven’t been great, so I won’t be too rigid. Here’s a blood, sweat, and tears story—just consider it a stock market version of “Alive,” and take it as entertainment. [Taogu Ba]

Chapter One: Entering the Jianghu (2014-2015)
In 2014, I stepped into the stock market with dreams of financial freedom. Back then, I thought stock trading was just looking at K-lines and news, and I could make money while lying down—after all, those market gods online said so, they wouldn’t lie to me, right?
The honeymoon of technical analysis
I crazily learned various technical indicators: MACD golden/death crosses, KDJ overbought/oversold, Bollinger Band breakouts, moving average bullish arrangements… I bought a bunch of books, took extensive notes, feeling like I was just a Leonardo DiCaprio away from being a Wall Street wolf.
At first, the market seemed to be very accommodating. During the 2014 bull run, I chased gains and cut losses based on technical signals, and my account once increased by 43%. 43%! I did some quick math—if I kept going like this, I’d be financially free in less than two years. Who would still be working at that broken job? I was already imagining how to write a cool resignation letter.
Then, the stock market crash hit.
Circuit breakers, thousands of stocks hitting the limit down, liquidity crisis… I watched helplessly as all my technical indicators failed, MACD repeatedly diverged at the bottom, yet stock prices kept plunging—like a patient in ICU insisting on doing push-ups. The support levels I learned about proved useless in panic; it felt like I had learned a set of 18 Dragon Subduing Palms, only to find my opponent wielding an AK-47.
My first huge loss nearly cut my account in half. Halving—this word sounds martial arts-like, tragic, and… poor.
Worse, I had neglected my career for trading, and my boss summoned me for a talk. The air in the conference room was as heavy as my holdings; he was disappointed—once a promising newcomer, now staring at charts during work and reviewing after hours, my work became perfunctory. My state then: physically at my desk, mentally lost in K-line charts.
I was so down that I angrily handed in my resignation letter. Young people have fiery tempers; I thought, “If I don’t stay here, I’ll find a better place.” Later, I realized—there’s no place to stay, and I became a vagabond.
After quitting, my account kept shrinking, savings evaporating bit by bit. I started a long job hunt, and the gaps on my resume felt like scars, each interview probing me about them. The inner torment gnawed at me day and night—pretending to be calm during interviews, questioning life in front of the green screen at night. I began to fear phone calls from my parents (“How’s the job search?”), fear classmates’ questions (“Heard you’re trading stocks, making good money?”), and fear the look in the mirror at my dazed eyes.
That was the closest I came to giving up. Not because I lost all my money, but because I realized I had walked into a dead end, and I was almost out of courage to turn back. That’s when I finally understood what it means to trade stocks into becoming a shareholder, to flip houses into becoming a landlord, to resign into unemployment—I had achieved two of those.

Chapter Two: The Illusion of Value Investing (2016-2018)
Technical analysis didn’t work? It must be because I didn’t understand companies well enough. Surely, it was my approach that was wrong, not the analysis!
I turned to fundamental analysis, started reading financial reports, learned DCF valuation models, studied moat theory. Buffett and Munger became my new idols. I practiced daily in front of the mirror, trying to mimic their “fear when others are greedy” expression, though at that time I probably only had fear left.
I picked a few blue-chip stocks: stable earnings, ROE over 20% consistently, industry leaders. I thought, “This time, it should be safe, right?” Good companies, long-term holding, being friends with time—whether time would be my friend or not, I first made myself a big fool with time.
In 2018, the US-China trade war erupted. The stocks of my selected good companies halved, their PE ratios dropped from 30 to 15. Good grief, I studied the margin of safety for so long, only to find that the margin of safety was studying me.
I looked at the excellent financial data, watched the stock prices fall continuously, and fell into deep confusion:
Why do good companies fall so much?
Why isn’t value returning?
Why did Buffett hold for ten years, but I want to jump off the building after ten months?
Later, I realized: Buffett held for ten years because he was optimistic; I held for ten months because I was trapped. These are two completely different strategies—one called value investing, the other called value speculation—failed speculation.
I learned to analyze fundamentals but didn’t learn to judge timing. Buying at the halfway point and losing 30% again. By then, my account had experienced halving after halving—what mathematicians call a “knee cut,” and in the Jianghu, it’s known as “above the ankle injury.”

Chapter Three: The Carnival and Illusion of Emotional Cycles (2018-2019)
Fundamentals also failed? Then it must be my lack of understanding of market psychology. It’s definitely the approach! My greatest strength is never giving up; my greatest weakness is also never giving up.
I plunged into the world of emerging emotional cycle theories. I studied hot money positions, reviewed the rise and fall of limit-up queues, learned about the emotional cycle of “freezing—recovery—高潮—retreat.” I called Eastern brokers, participated in the frenzy of stocks hitting the limit-up in chains.
During that period, I did catch some big winners. Watching my account recover rapidly in the short term was addictive—more exciting than leveling up in a game, more heart-pounding than falling in love. I finally felt I had grasped the secret of A-shares: this isn’t about value, it’s about emotion and betting! Value investors are old-fashioned; emotional flow is the future!
But soon, I tasted the bitter pill of the “kill switch.”
During a emotional downturn, I fully bought into a seemingly strong rebound stock. The next day, it opened with a one-word limit down; the third day, it continued to hit the limit down. I wanted to wait for the rebound, but instead, I faced three consecutive limit downs. It felt like riding an elevator—going up, stopping at each floor; coming down, pressing B2 directly.
That trade cost me over 20%. Over 20%! My value-investment stocks might only fall that much in a year, but this emotional cycle was over in three days—efficiency is high.
I learned to read emotions but couldn’t control my own. I became a slave to emotions, not the master—technically, I was the rider, emotions were the horse; but in reality, I was the horse, and emotions were the rider—drunk and reckless.

Chapter Four: The Darkest Moment and Enlightenment (2020)
Early 2020, the pandemic broke out, and the market plummeted. Sitting in front of my computer, looking at the remaining ten-something thousand yuan in my account, I started to doubt:
Am I not suited for this market? Is stock trading itself a scam? Was wealth destined not to be mine?
I stopped trading and reviewed all my transactions over the past six years. A cruel fact surfaced:
My biggest losses in technical analysis came from chasing breakouts and bottom-fishing at support—thinking I was riding the trend and buying low, selling high, but actually I was chasing the rise and falling with the market.
In value investing, my biggest losses came from stubbornly holding and ignoring trends—I thought I was sticking within my circle of competence, but I was actually trapping myself.
In emotional cycle trading, my biggest losses came from adding during euphoric peaks and panic-selling—thinking I was buying on divergence and selling on consensus, but I was actually doing the opposite.
It turns out all theories are just tools, and the real problem lies with the user. Like giving a monkey an AK-47—it can shoot down the entire forest, including itself.
I remembered Livermore’s words: “The market is always right.” I thought of Soros’s reflexivity theory. I realized that over the years, I wasn’t adapting to the market but forcing the market to adapt to my theories—like ordering at a restaurant, not looking at the menu, only thinking about what I want, then blaming the chef for not making it right.
When I used technical analysis, the market was clearly trending, yet I looked for reversals;
When I used fundamental analysis, the market was clearly a psychological game, yet I discussed valuations;
When I used emotional cycles, the market was clearly driven by institutions and trends, yet I counted limit-ups.
I kept fighting the market instead of dancing with it. The market is a Tai Chi master, using softness to overcome hardness, but I was a reckless brute, only capable of one move—Black Tiger Pounces on the Heart—and I kept emptying myself.
At that moment, I finally understood: it’s not that my theories are wrong, but that I use them too rigidly—so rigid that I become foolish, thinking there’s a universal formula for all market conditions.

Part Two: Getting Serious. I don’t want to say I’ve “attained enlightenment”—that term sounds more and more mystical. There’s no such thing as a one-time solution in this market; it’s always changing. Even the big shots have bad phases. But my understanding of this market has deepened, and I hope my path of reconstruction can inspire you.

Chapter Five: Returning to the Essence, Rebuilding the System (2021–Present)
In 2021, I cleared out all my technical books, leaving only a notebook. I decided to start fresh, re-examining everything I had learned:
Technical analysis taught me to read charts, identify support and resistance, and recognize trend structures;
Fundamental analysis taught me to understand industry logic and avoid traps of junk stocks;
Emotional analysis helped me grasp emotional stages and structure hype.
These aren’t mutually exclusive choices but can be integrated.
Gradually, I formed my own trading model:
My three main weapons

1. Two-into-Three Relay
This is my strongest battlefield. The first limit-up is too many and too scattered; beyond four limit-ups, risk-reward diminishes. The “2-in-3” is the most certain and cost-effective node.
My core logic: the first limit-up tests capital, the 1-in-2 filters initial candidates, and the 2-in-3 confirms the true leading stocks. This node avoids the randomness of the first limit-up and allows me to enjoy the subsequent main rally.
I focus on key factors:
Is the theme in its early stage of fermentation, not late?
Does the stock hold a unique position within its sector?
Is there a balance between bidding strength and turnover? I reject stocks with one-word limit-ups or weak stocks with no volume that suddenly surge.
Does the market’s emotional cycle support the relay?

2. Core Entanglement
For confirmed core stocks, I adopt a “entanglement” strategy—not full position at once, but rolling operations: repeatedly T+0 trading, buying on dips, selling on highs.
Core logic: true leaders don’t end easily, but they fluctuate wildly. Instead of guessing tops and bottoms, I stay with them through the main ascent, managing risk with position sizing, and expanding profits with high sell and low buy.
This requires deep familiarity with the stock’s nature and, more importantly, the courage to believe in divergence and be cautious during consensus.

3. Judging the Main Line
This is the premise of all operations.
Every trader in this market should believe in the truth: “Themes are the primary productivity.”
Follow the main line if it exists; otherwise, control positions and rotate.
Identify sectors that are not high but have stories to tell later.
Sectors that outperform unexpectedly in the current market.
Sectors with full sets of limit-ups and complete tiers.
Sectors with policies or industries that keep exceeding expectations.
Trade only in arenas you understand.
This discipline I earned with over a million yuan of lessons.

Chapter Six: Insights After Achieving Stable Profits

1. The greatest enemy in trading is always yourself
Every loss stems from ignorance, luck, or stubbornness.
I learned to ask myself before each trade: If I make a wrong move, can I accept the biggest loss?
I remind myself during profits: It’s not about how good I am, but that the market is rewarding me.
I learned to view the market objectively and understand myself honestly.

2. Learn self-control and respect the market
The market doesn’t force you to buy; resist the urge to chase highs—better to wait for a dip.
The market doesn’t force you to sell; resist panic—divergence can be a better low-entry point.
I used to be fully invested all year round; now I know that holding cash is part of trading.
Self-control isn’t weakness; it’s clear awareness of your abilities.
Respect isn’t superstition; it’s humility toward the market’s complexity.
Controlling drawdowns is the foundation of compound growth—learn to diversify, as unexpected black swans always appear.
Slow is fast; don’t try to seize every opportunity.
Living long is the real speed.

3. The best teacher is the market
All theories are maps, but maps are not territory.
The market changes daily; yesterday’s holy grail could be today’s poison.
The market is always right; only the market is the one teacher that never lies.