[Red Envelope] 3.22. Weekend Chat. Quantitative Era: Hold Mid-term, Trade Waves, Survive Short-term!

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Now that quantitative trading dominates and retail investors find it hard to operate, how should medium-term, swing, and short-term strategies be implemented? How to avoid being exploited?

Have you noticed lately? Many veteran traders, their avatars turned gray, stopped posting, quit, or are afraid of losses. Why? It’s not because their skills are lacking, but because the opponents have changed. In the past, the market was about people competing with people. Traders against traders, retail investors against traders, competing on emotion, understanding, and courage. If you could understand and keep up, you could make some profit. Now, half the market is people, and the other half is machines — quantitative funds.

What is quantitative trading? It’s computer programs that monitor the market 24/7, place orders in milliseconds, never sleep, never get emotional, greedy, or scared.

What can they do?

Compete on speed: placing orders in milliseconds, your phone can’t keep up, chasing high or breaking stocks costs money.
Monitor the order book: watching your orders, your stop-losses, specifically targeting key levels and critical points.
High-frequency T: holding a core position, selling in the morning, buying back in the afternoon, profiting from the price differences.
Fake signals and trap lines: pushing prices up early, fake limit-ups, sudden movements at the end of the day to lure you into following and buying.

Summary: Quantitative trading eats three things — high-frequency trades, emotions, and volatility. The shorter your time frame, the more active you are, the more you watch the market, chase gains, and hit stocks, the easier you are to be exploited. So, the first thing in stock trading now isn’t how to buy, but how not to get cut.

So, how can I avoid being exploited by quantitative trading? Survive!

1: Medium to long-term investors! The best defense against quant

For medium to long-term investing, we don’t rely on price differences to make money. We rely on fundamentals, industry trends, and performance, holding for more than half a year for value investing. How to choose value stocks? Pick large-cap stocks with good performance, main themes, and liquidity. No matter how powerful quant is, it can only exploit volatility, not a company’s growth. If you make friends with time, quant has no way to beat you.

Don’t go all-in at once; buy gradually in batches. Add when prices fall, hold steady when prices rise. Don’t chase big gains; buy during corrections or dips. Don’t look at daily fluctuations, focus on quarterly or semi-annual performance. Reduce market watching; checking every two days is enough. Don’t fear volatility; the more quant smashes the market, the less you should move. Don’t try to outsmart the market daily with T trading; ordinary people doing T will only lose more, giving money to quant. When fundamentals deteriorate, performance declines, or valuations become bubbles, and better, cheaper alternatives appear, slowly reduce your holdings and switch sectors. Focus on tech growth sectors with high valuation, low prices, good prospects, and solid earnings. Stick to logical, value-based investing. Be slow, patient, and minimal in trading. When the market moves, ignore it, don’t act.

2: Swing trading: a balanced approach (see previous technical posts for core swing strategies)

For trending stocks, watch the current market sector’s popularity. In a mainstream trend, avoid chaotic stocks. Buy at the start to catch the move, don’t chase the tail at the end. Don’t wait until the trend is almost over to enter, chasing the tail. Choose stocks with slow, steady growth, moderate volume, gradual price increase, avoiding erratic, choppy, or high-turnover stocks, which are often quant-driven. Poor entries lead to being caught in the middle. Alternatively, pre-position in next hot sectors like savings, autonomous driving, commercial aerospace, etc. Use 20- or 30-day moving averages for light positions and trial and error. Don’t focus on single stocks; diversify with 2-3 stocks, selecting the strongest. Whether for current hot sectors or strategic layout, base your choices on underlying logic. If a stock breaks support, don’t hold; cut losses quickly. If it stabilizes the next day, re-enter. When the sector cools, gradually sell your core holdings.

3: Short-term: the most difficult and most vulnerable to exploitation

Honestly, I don’t recommend short-term trading now. Traders can’t beat quant; machines are faster, cooler, and more diligent. The survival rule is to avoid chaotic stocks. Focus on high-recognition, high-volume, active, popular stocks with crowd support. Negative examples: last Friday’s Riscon, which was hammered down; Mingpu Guangci, which was hit with a single order and exploded, then was crushed back. Many retail chips were caught at the top. Positive examples: last Friday’s electric stocks, which showed divergence and low buy-in points. How to identify buy points? As previously discussed, observe feedback from leading stocks and laggards. For example, last Friday I low-bought Huadian Liaoning, looking for three signals: first, whether the rebound is gaining momentum (like Guangdong Electric and Shao Electric); second, whether the secondary stocks like Huadian Energy show negative feedback; third, whether the core leader Huadian Liaoning is not opening below support or showing divergence. If these signals align, you can buy on divergence. If the market is unstable or no new main themes emerge, avoid aggressive trading. Only stick to risk-averse, crowd-supported stocks.

The core of short-term trading is simple: operate within your understanding and pattern. Strong execution. Don’t hold unrealistic expectations. If the market doesn’t meet your expectations, exit quickly. The key is not to guess tops but to focus on daily weakness and strength, and decide whether to stay or leave.

The above logic may not be perfectly clear. I mainly trade, my writing isn’t very polished. If you have questions, leave a comment, I’ll reply. I have many ideas in my mind but struggle to put them into words.

Technical posts directly below↓↓↓↓↓↓↓↓↓↓↓↓↓↓

**

Super detailed trading + swing operation manual: bidding determines life or death, capturing buy/sell points during trading, easy-to-understand system for beginners!

https://m.tgb.cn/a/2q03WHAZdWb

**

From quant to short-term: core flexible techniques for chaotic trading periods. How to hedge risk, prevent account drawdowns, and stabilize returns!

https://m.tgb.cn/a/2qbxOcQZj51

**

Core swing trading strategies

https://m.tgb.cn/a/2pferIa8CWv

**

Operate only within your understanding pattern

https://m.tgb.cn/a/2oGKOX9eCuc

**

How to improve win rate on breakouts, and how to handle bad stocks and high-volume stocks the next day?

https://m.tgb.cn/a/2oSfJzxbm7B

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