Teacher Erchi's quotes on learning "Watching Your Own Settlement Growth"

My biological clock is completely messed up. Last night, after finishing my post, I had a one-hour voice call with a stock friend in Hangzhou, and I didn’t sleep until 5:30 AM. Then I woke up at 9 AM, so sleepy, so sleepy, but I had a lunch appointment with a friend in Guangzhou. He came to Shenzhen to have dinner and chat with me. After lunch, we strolled from Shenzhen Bay Park to Talent Park, and it was already past 4 PM. Went home to sleep, slept until after 9 PM, and tonight is another sleepless night… [Taogu Ba]

These past two days, I’ve been thinking about how to build a stable profitable trading system? Including chatting and exchanging ideas with the two friends above, I also tried to ask them about their systems, but still had no ideas until I just came across “Teacher Er Chi’s Quotes,” and suddenly I had an epiphany. Teacher Er Chi repeatedly emphasized his “Trade Log,” which truly enlightened me. I previously tried to design a set of stable profitable rules with wild imagination, but that idea is very unrealistic. The trade log contains beautiful trades I made myself, as well as amateurish operations. Strengthen the points that make money, avoid the points that cause losses, focus on doing what I am good at and do it well, and repeat execution to achieve stable compound growth.

1. The best teacher is your own Trade Log. Focus on strengthening profitable trades and avoid losing ones;
2. When the market is not good, communicate more industry information. When the market recovers, you’ll be prepared. Short-term funds entering the market can be judged and followed easily;
3. Don’t fall in love with stocks. Respect market choices. When weak, give up. I’ve made many mistakes in trading so far, always a one-shot decision. Making back the losses elsewhere is fine;
4. On the road of investment, there are never shortages of noise. It tests your cognition and vision. Without independent thinking, it’s hard to stay true to your original intention and do your own trades well;
5. It’s normal to lose or profit when trading stocks. Don’t be emotional. It benefits no one, including yourself. Think more and summarize more often;
6. There is no fixed profit model in the market. No sunny path. Combine your Trade Log to forge your own way. The best traders are those who summarize and find what suits them best;
7. When things are not going smoothly, go to cash for a while. Clear your mind. Holding stocks continuously makes judgment easily influenced by current holdings. Clarify the certainty before taking action;
8. Don’t try to profit from every sector. Just focus on what you understand. I’m not the type to chase stocks during trading hours. I research in advance. Not making money on some stocks doesn’t affect life. Follow your own rhythm;
9. Sometimes, going to cash makes it easier to analyze the market rationally. Be patient and wait for new entry points for certain stocks. The account can then recover. I often do this. Holding positions makes it easy to be irrational, and trading is influenced by holdings. Be decisive in buy and sell;
10. Stocks are like playing mahjong. Win by losing less and earning more. Before that, you pay tuition fees to grow. Even after growing, you won’t win every time. When luck is bad, cut losses. Make it back next time. The most feared are irrational gamblers who don’t know when to stop;
11. During a big decline, it’s easier to select stocks. It helps focus. When the expected trend doesn’t match the actual market, sell decisively. Bear markets are good for training trading skills. In bull markets, buying the right stocks and lying flat can earn big. It doesn’t improve skills or stock selection much. It’s hard to learn. Comment: I have a different view on this. In a bull market, you should learn how to improve your offensive ability. Practice skills in bull markets, gain insight in bear markets.
12. The best learning still comes from Trade Log summaries. Reinforce and replicate profitable operations, avoid losing operations, overcome desires, and avoid chasing non-planned trades. In the future market, those who go far need some fundamental analysis skills combined with technical analysis for buying and selling. This will be more stable;
13. When a strong stock pulls back to the 10-day moving average, just get close. Funds should know how to maintain. If it hits the 10-day MA directly, it indicates insufficient strength. Such stocks have limited profit potential and are prone to breaking below and incurring losses. For popular stocks with good momentum, this is how it works;
14. In fact, theoretical knowledge is really useless. If it were useful, many wouldn’t be so confused. The stock market has never had a single way to make money. The most practical thing is to study your Trade Log—which trades are profitable, why they are profitable, accumulate this, then analyze losing trades—why they lost, and try to avoid them. Gradually, form your own profitable model;
15. The A-share market is constantly changing. The market forces you to grow. The best growth for everyone is to find a route that suits you through trading. Because of different personalities, even if trading the same stock, buy and sell points differ. The most suitable is the best. Summarize more, learn from others’ experiences;
16. Everyone needs to grow on their own. Trading really depends on yourself. Others’ advice is just reference. Your own trades—whether big wins or big losses—should be treated with a calm mind. Bad emotions only make it worse. Summarize your profitable operations, strengthen them, and form your own pattern. Avoid unplanned chasing. Don’t expect to make money every day. Step by step, slowly build up. Flowing water does not compete to be first; it strives to be endless.
17. A frog at the bottom of the well wants to jump out and see the outside world. It jumps high, but each jump falls back to the bottom. Such jumping is useless; it can’t create a qualitative change. But a snail, also at the bottom, wants to go out and see the outside world. It crawls slowly but persists step by step to the mouth of the well. After some time and effort, it succeeds. Investing is similar—making useful small wins and accumulating them leads to big wins;
18. You can look for past live broadcasts of award-winning traders. There should be gains. They perform so well because they have highlights. Some insights, once pointed out by others and combined with your own experience, might suddenly make sense. Standing on the shoulders of giants allows you to see farther. The stock market is like that—sometimes very complex, sometimes very simple. But basic accumulation is necessary. Most stable trading models are developed through long-term experience and practice;
19. Stocks that have been eliminated should be decisively exited and replaced with new leading stocks at different stages. This is switching. The market’s dead bulls are not popular. Sometimes, being shrewd is better. Stocks in the same sector can have vastly different returns. Some miss the opportunity, and when the sector declines, they suffer big losses. Then negative emotions come—blame everything but oneself. Every trader needs to analyze themselves, learn from successes and failures, and grow;
20. Leading stocks in the same sector first rise. If there’s a leading stock with momentum, smaller players will follow its lead and see funds flowing in. After the leader hits the limit-up, more follow-up funds can’t buy the leader, so they buy the sector’s smaller stocks. The leader’s rise is driven by funds actively. Many smaller stocks are just following. These funds are not very proactive, have limited vision, and are purely arbitrage. When the wind blows, they flee first. When the leader fluctuates, smaller stocks fall sharply. That’s how it works. The operation should focus on stage leaders;
21. No matter how the stock market evolves in the future, I only believe that valuable companies will stand out naturally. A mature market must conform to the laws of value. Of course, in the short term, there are main rising periods and non-rising periods. Learning more technical analysis is useful. The old methods of small-cap and speculative trading in A-shares will gradually be phased out. Summarize yourself well—see what suits you. If you can’t survive in this market, just work hard. Wanting to trade well and do a good job at work simultaneously is too difficult;
22. Trade stocks with your own idle funds. Good trades can grow several ten-thousand-yuan investments into large sums. Poor trades can wipe out millions or tens of millions of capital. Using idle money to trade stocks allows for a more relaxed mindset when facing unexpected events. The biggest certainty in A-shares is its uncertainty. Under high debt pressure, making a few big mistakes can distort your mindset, leading to distorted trading, losing confidence, doubting your abilities, and falling into a vicious cycle. Ultimately, you’ll be eliminated by the market;
23. During a bull market, the overall rise makes trading more difficult for some experts because it’s hard to pick targets. For ordinary investors, it’s easier—riding the wave and sharing dividends. In bear markets, speculation focuses, making it easier to pick contrarian stocks. Well-done, they can earn even more than in bull markets—especially those who know when to stay out and when to jump in. These are what you call “Dragon Empty” or “Dragon Select” traders. There are many ways to speculate in A-shares, and many profit models. Learn from top traders, adapt their strategies, find what suits you best, and develop your own bull-bear model. Then, you can profit in both markets;
24. The legend of Nirvana rising from 1 million to 100 million in four years. During that competition, his annual return was only about 3-4 times, but some competitors achieved ten or even dozens of times in a year. A 3-4 times annual return isn’t outstanding, but why is he the only legend among the contestants? Flowing water does not compete to be first; it strives to be endless. That’s the power of compound interest. If you lack understanding of your stocks, daily fluctuations will affect your emotions. Over the years, it’s hard to achieve stable compound growth. We don’t need to compare with other stocks or others or ourselves. As long as you can maintain stable compound growth, keep a proper mindset, and walk steadily step by step, this foundation is the most stable. It won’t easily collapse, and you’ll eventually reach your poetry and distant dreams.