Saturday, July 25, 2015

Remember the lessons of the martyrs who paid for their lives

"Futures Legend Liu Qiang Jumped to His Death". Needless to say, whether this ancestor was sick or bankrupt, but he had been in the stock market for many years, and had been so successful that he had earned money that could not be spent in a lifetime, like Jesse Livermore, who was the memoirs of a stock dealer, and ended his life in an extreme way.

Such a successful person can not resist the weakness of human nature, and completely defeat on the weakness of human nature, how can we be exempt from vulgarity, so we must survive, remember the tragic lessons of the martyrs, step on the blood of the martyrs, face the cold wind, face fearlessly, and move forward bravely.

Reprint three articles of Mr. Liu Qiang before his death, pay tribute to him, and wish him happiness in heaven.

Article 1: "Liu Qiang: A few reflections on the A-share stock market crash!" Excerpt

For two whole weeks, I didn't post a single tweet, why? After calming down, I began to reflect on my own shortcomings, and slowly realized that the core of the problem still appeared in my own major character weaknesses.

First, I was too obsessed with fundamentals and made me ignore the risk control tips from the technical side.

Personally, I have always been a fundamentalist, and the main principle of choosing stocks is that the company's future performance will grow steadily, so that the company will grow from a small to mid capitalization company to a mid to large market capitalization company, and my long-term holdings will enjoy the share price leap brought by the company's growth. This method of stock selection has been tried and tested in many bull markets. This kind of ignoring short-term small fluctuations, most of the stocks held in the long term will have high returns of several times or more. But I didn't expect this long-term holding method to make me lose the best time to stop my loss in this stock market crash. A lot of stocks with very large floating profits were indifferent when they first started falling. Below the 20-day line, I began to focus on these stocks, and the fundamentals were no longer problematic, and I continued to hold on to them. Falling below the 30-day line, I began to realize the systemic risk of the market, and took profit and went out. Falling below the 60-day line, I felt that a stock with such good fundamentals could fall to such a low price, so I bought a heavy position, and was immediately trapped, the market plummeted, and the stock price plummeted, and then stopped loss. The mentality is completely out of order. The reason is that I am too obsessed with the fundamentals of stocks, thinking that as long as the stocks are good and the main force is not out, what am I afraid of? I didn't expect to catch up with the stock market crash that has not been encountered in a century, and no matter how strong the main force is, this time it was made of dumplings.

The A-share crash reminded me of the 1930 U.S. stock market crash. From May 1930 to November 1932, in just two years, the U.S. stock market crashed six times in a row, and the Dow Jones index fell to a staggering 41 points. In this stock market crash, nearly 4,000 people committed suicide by jumping off buildings due to bankruptcy, 50 million people lost their jobs, and the United States and the world entered a decade-long period of economic depression. In this stock market crash, investment guru Owen Fisher lost millions of dollars in a few days and went bankrupt in an instant. Livermore, a generation of speculative geniuses, lost $100 million in the crash and eventually chose to shoot himself. It wasn't until 25 years later, in 1954, that the U.S. stock market returned to its pre-crash index level. Think about this scene, how tragic! And our A-share stock crash, although the index has not been so tragic, but the rapid decline, the sharp fall, and the large coverage are really unacceptable.

Although it is a natural disaster, it can still avoid such a large loss. This depends on the risk warning of technical analysis. In this regard, Stanley Crowe is our role model. Recently, I plan to re-read Stanley Crowe's Futures Trading Strategies again and learn from the masters.

2. Never overestimate the capabilities and IQ of the government.

To be honest, I have always thought of the Chinese government as a government agency led by a high-IQ elite. Democratic centralism allows the government to sometimes be more efficient in making major decisions than Western democracies. Especially the current Xi and Li government, I am as optimistic as everyone else. What's more, this is a man-made bull market directed by the new government, and since the government needs a bull market, what do we have to worry about? But this kind of one-in-a-million accident just happened! I can't imagine that the bull market of leverage directed by our government was the government's backhand to reduce the leverage instantly, which led to a liquidity crisis in the stock market, with a serious imbalance between buying and selling, and thousands of stocks falling continuously, resulting in a serious stampede! The leverage can be lowered, and the over-the-counter allocation can also be checked, but this requires a skill, you make a high-speed rail train that has accelerated to 300 kilometers per hour stop instantly, and it is strange if there is no accident!

Today, it's not so much about rescuing the market as it is about rebuilding after the disaster. Because both technically and in terms of popularity, this rare bull market is over. Trust is more important than gold, and a capital market that has lost trust in the government will have a bull market? I can't imagine

3. When the risk comes, the most important thing is to save your life!

I remember a classic quote in "Memoirs of a Stock Dealer": "When I see a red flag, I don't argue with it." I'll get out of the way! In a few days, if everything looks good, I'll come back. I thought of it this way, if I was walking along the tracks and saw a train coming at me at 60 miles per hour, I would jump off the tracks and let the train pass without being stupid enough to stand still. Once it's gone, I can always get back on the tracks if I want to. These words are a very vivid expression of speculative wisdom, which I will never forget. Oddly enough, the trouble most speculators have is that something inside of them doesn't make them brave enough to close their positions when they should. They hesitated, and they hesitated to watch the market move many points in a direction that was not in their favor.

Looking back now, this sentence is simply too much in line with the mentality of most people at the time of the stock market crash. The next time there is a risk, remember that saving your life is the most important!

4. Narrow your investment circle and learn to think independently!

To be honest, before this stock market crash, there were still a few friends in my many investment circles who had been alerting to market risks. But looking back, I have so many friends and hear hundreds of suggestions every day, how could I have noticed so few bears. Investment does require circles, and there must be a mentor for a threesome, but in addition to a lot of communication, we still need to leave ourselves some time for independent thinking. At the end of the day, investing is something we make our own decisions. That's why it's important to think independently!

Having said so much, it's all a post-mortem analysis, and the crux of the question is what to do next? My personal advice: a gentleman does not stand under a dangerous wall. Today's market has not stabilized, and the best strategy is to put cash as king and wait and see. If the bull market is really over, then entering the stock market now is looking for death. If the bull market can come back to life, then we don't care if we enter the market a few days later. In short, don't easily believe any advice from the government, think independently, see more and move less!

In addition, I would like to mention in passing that in addition to focusing on the stock market, we can already start focusing on commodities gradually. If the bull market in A-shares is really over, the spring of commodities is not far away.

Article 2: "Xiaoyao Liu Qiang: What should we learn from the god of stocks?" Excerpt

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1. Buffett cannot be copied. Those who learn from Warren Buffett live, and those who copy Buffett die. In fact, Warren Buffett's investment philosophy has also been keeping pace with the times. Of the three people who had the greatest influence on Buffett's investment philosophy, Graham advocated buying small companies with a margin of safety at low prices. Fisher-Price, on the other hand, has shifted Buffett to a more management-focused approach to stock picking. Of course, the biggest influence on Buffett is actually his current partner, Munger. He admonished Warren Buffett not to buy a bad company at a low price, but to buy a great company at a reasonable price. This has given Buffett a qualitative leap in his investment philosophy. The three teachers, Warren Buffett integrated their investment philosophy and formed their own investment style, which led to today's success. Therefore, it is important for a famous teacher to guide the way, but your own understanding is the key to success.

2. The importance of taking precepts as a teacher. Warren Buffett can live for 50 years in the bloody capital market, not by a sharp knife or a diversified investment strategy, but by his precepts as a teacher, only doing investment opportunities that he can understand. This allowed him to miss the great US Internet bull market in 1999, but it also allowed him to avoid the crash of the dot-com bubble. Only invest in a simple and understandable business model, only invest in companies with a moat and a margin of safety, simplicity and persistence, Buffett's calmness is especially worth learning from. For those of us who are professional investors, what is lacking is not the ability to spot opportunities, but the courage to give them up. Learn to let go, learn to take only one scoop of 3,000 weak water, and learn to take the precept as a teacher, so that we can become the final big winner of the investment marathon.

3. Integrity is one of the important reasons for Buffett's success. In the deceitful capital market, everyone seems to be fighting for who is smart and desperately trying to take advantage of others, but Buffett is the opposite, his truth and integrity make him a real person who is really wise and foolish. In the annual Buffett shareholder letter, Buffett has never only reported good news and not bad news, but will honestly tell all shareholders about his regrets in this year's investment. Virtuous, your moral level determines the wealth you can carry, this is true. In the eyes of Professor Donna, Buffett is a wise man who is humorous, funny, has no shelves, and makes others feel very comfortable. Only such a person is worthy of being in charge of such a huge amount of wealth.

Fourth, the essence of investing in stocks is not to pay attention to the market, but to lie in the research behind it and super patient waiting. Warren Buffett rarely pays attention to the stock market, and most of his energy is spent looking for outstanding listed companies, and then patiently waiting for the market to misprice it, buy heavy positions, and hold them for the long term. Warren Buffett's most classic sentence is that he never worries about the exchange being suspended for five years after he buys stocks, because the companies he buys are worth holding for a lifetime. Comparing the short-term chasing of our domestic investors, the gap in the realm of investment can be seen. Interestingly, Warren Buffett feels that his biggest weakness is precisely his lack of patience, and he admits that it is difficult for him to listen to others for more than five minutes, and it seems that the god of stock is also a quick temper.

5. Is Warren Buffett's investment approach suitable for China? I'm afraid there will never be an answer to this. Everyone has their own Hamlet in their hearts, and every investor has their own Buffett in their hearts. I'm a Livermore fan myself, and compared with the ups and downs of the speculative genius Livermore, Buffett's investment philosophy and wealth are actually far less than Livermore's back then. But what does it mean that Livermore, who was more talented, eventually committed suicide, while Warren Buffett, who was wise and foolish, started and finished well? This shows that success in life does not depend entirely on your IQ, but on your wisdom in life. Slow is fast, be a turtle in the investment field, not a rabbit in a hurry, you can achieve the final victory!

Article 3: "Xiaoyao Liu Qiang: Introduction to Multi-point Resonance System"

The multi-point resonance trading system includes a speculative philosophy. The big picture. Fundamental analysis. Technical Analysis. Trading rules and trading mentality are several major parts. When several parts of the road resonate, it is a better trading opportunity. It should be emphasized that each ministry can design its own multi-point resonance, mine is just a reference, only the multi-point resonance that you summarize by yourself is truly your own.

About the philosophy of speculation

1. What is the essence of understanding speculation? The essence of futures speculation is to help the market find a reasonable price for a commodity. Only by changing our competitive thinking and looking at speculation with creative thinking can we see the essence of speculation.

2. What is the relationship between speculation and art? Tao is a speculative philosophy, which can be copied and learned, but the technique is its own trading system, which is unique, and must be summarized according to its own characteristics, especially to integrate its own advantages and disadvantages into its own trading system.

3. The avenue of speculation is the state of inaction. Instead of sighing for the past market, nor worrying about the market that did not happen in the future, the real state of inaction should be to live in the present, only analyze the current price volume and open interest, and make corresponding countermeasures. Only the things of the moment are real.

4. How do I build my trading system? 1. Futures is a practical science, and it takes at least 5 years of practical experience to establish a preliminary trading system suitable for you. 2. The trading system is just an outline, it needs to change according to the changes in the market, and there is an immutable trading system. 3. Each trading system can only adapt to a part of the market, and you must wait patiently for the market that suits you before trading.

About the big picture

1. What is the big picture? It is to look at speculation from the perspective of world politics. 1. The United States dominates the world economy. 2. The game between China, the United States and Europe. 3. Finance is a political war.

2. Speculation in terms of the speculative flow of global hot money. 1. The global currency is overflowing, and hot money is flowing to the most profitable markets. 2. The dominant idea of hot money is the idea of hedging.

3. Look at speculation from the perspective of China's national conditions. 1 in the Chinese market, China. The attitude of the government is crucial. 2 In China, political factors outweigh economic factors. 3 Many commodities are represented by China. The government's state-owned enterprises to monopolize.

About fundamental analysis

1. Understand what fundamentals are? What speculators need to analyze is the future supply and demand of commodities. Not now, but in the future.

2. Trading opportunities only arise when the market has mistaken expectations about future fundamentals. There are only two such opportunities: supply will be greater than demand in the future, prices are still high, and opportunities arise. In the future, supply will be less than demand, and the current price is still low, and there are opportunities.

3. The way to understand the fundamentals: Be in the present. Cargo companies understand the entire industrial chain; To the senior present. Merchant Consulting; Get information from futures company Research.

About technical analysis

1. John Murphy's "Technical Analysis of the Futures Market" is the foundation and needs to be familiarized.

2. The essence of technical analysis is to look for trending opportunities in the market, and the judgment of breakouts is the core of technical analysis.

3. The focus in technical analysis is on candlesticks, volume, and open interest. Volume: The intensity of the long-short short-term fight. Open interest: The degree to which the longs and bears diverge on the future price. The open interest has increased significantly, and once the price breaks through, there is a great chance of a big market. A turning point in the market: a significant increase in volume.

4. Money flow analysis is also part of technical analysis. When the market speculates on the main force with the present. When the opinions of the merchants are unanimous, a big market often occurs.

About trading rules

1. The stolen income = p*r*b.1p success rate, which is increased by the resonance method. 2b position ratio, heavy position when profitable, light position when loss. That is, increase the position when the floating profit is made, and do not increase the position when the loss is lost. 3R profit and loss ratio: big win and small loss, stop loss and stop profit. 4 All three are multiplication, and they must all strive to be positive.

2. Trade only when multi-point resonance.

3. Long market, short market.

4. Make only one variety at a time.

5. Test positions in the trading process of the whole trading system. Open a position. Add to your position. Stop. Take Profit.

About the trading mindset

1. Defend first and learn to give up the market. Grasp the big and let go of the small.

2. Floating win to hold the list.

3. A profit order cannot be turned into a loss order.

4. Handle the relationship between trading and life.

5. Find a hobby in your life. Motion. Reading and traveling are good ways to de-stress.

6. Reward yourself in time when you earn money.

7. Build your own futures circle. Who you are with determines the level of your thinking.