Table of Contents:

1. Who are the “leeks” that they are really referring to?

A so-called “leek” is an individual investor with limited resources who either fails to make money or loses money in the market.
Also, let’s add a common feature of so-called “leeks”:
They severely lack basic reading ability. They are the kind of people who buy things but have never read a manual in their lives. The are the kind of people who, no matter what they get, always ask somebody else how to use it… It’s so common, right?

2. Where the fate of “leeks” begins…

For all novices, this law never changes:
* As soon as you buy, the price will fall;
* As soon as you sell, the price will rise… It’s simply infuriating!
So why does this “bizarre” situation occur? Because the fundamental reason for the end to a certain set of market conditions is “new capital drying up”. In other words, when middle-aged women who sell tea eggs on the street start talking about stocks, the stock market’s “new capital” is on the verge of drying up… Think about it! “When even you, who is not related in any way, know about it and want to rush in and make money”, then the market conditions have probably reached their end, right?

So, for novices, there are two sentences that are very important
* If even you start to enter the market, the bull market is about to end…
* You should first observe, and buy nothing… Once the bear market arrives, wait until everyone starts calling each other names, and then start to buy, buy, buy!

3. “Leeks” only have a future if they mend the pen after having lost sheep…

So, what’s the most important thing for “leeks” who have “mended the pen after losing the sheep” to do? It’s quite simple:
* If they still have money, slowly build their position…
* If they don’t have enough money, work as hard as they can to earn money outside of the market…

4. The most important thing ability that traders should have…

I personally distinguish between speculation and investment in this way:

Speculators refuse to learn, and investors are good at learning.

Before trading, research diligently and study deeply. After trading, whether you won or lost, you must review and summarize, correcting your ideas and thinking in order to improve your next decision. People who do this are investors in my eyes, even if they “enter and exit quickly”.
What about “leeks”? They don’t study, they don’t research, they only see what is under their nose, they blame everything but themselves…
Since I started in 2011, seven years have passed in a flash, and I’ve seen countless people go crazy, whether it be for bitcoin or blockchain. But how many people have actually read the bitcoin whitepaper? And how many people have not only read it, but read it multiple times, and periodically bring it out to read it again? Most people who have not made money in bitcoin really can’t blame bitcoin, they can only blame themselves. Why? Because they don’t even know what the thing that they are trading really is…
In the phrase “mend the pen after the sheep is lost”, “pen” in the end actually refers to your “opinion bank”, “knowledge bank”, and “decision-making apparatus”.

5. An idea for breaking free of the fate of a “leek”…

What is the greatest common understanding of “leeks”?
According to my observations, all leeks endorse an idea that is actually mistaken:

So-called trading is a “zero-sum game”.
That is to say, they believe that the money they earned is money lost by others. Or, in other words, any amount of money that they lose has definitely been earned by someone else.

The correct explanation is quite simple:

We bought at the wrong time.

6. The fundamental reason why “leeks” lack manners…

At any given time, if traders have completely identical thinking, judgement, needs, and conclusions, it is impossible for there to be a trade. At their core, all trades are the result of differences in thinking. That is to say, traders must find someone who has different or even opposite conclusions in order to complete a trade, or else all they can do is “hang out their order”, and wait for someone with different conclusions to come along.

7. Who said “leeks” don’t care about finding value…

If you made a trading decision at the wrong timing, then what is the correct course of action?

It’s easy: Wait for the next correct moment of opportunity!
it was only after several years in the market that I started to understand the flaw of “value investing”:
Even though it is correct, it can only explain a small part of the world.

8. “Leeks” don’t lack patience, they lack strength…

If two people are betting on flipping coins, with a bet of 10,000 RMB each time, and the coin is a perfect coin, so nobody can possibly cheat… Then let me ask you, what decides who wins in the end?
So in this type of game, in the end, it’s not “luck” that decides who wins, but “strength”!

What does strength refer to in the trading market? There is a clear definition:

Long-term, stable, low-cost cash flow.
At the same time, there is another important principle:
Control the position.Always keep a certain percentage, or at least a certain amount, in cash — just as you need an oxygen tank when snorkeling, it’s not negotiable.

9. Those who like to take risks are always “leeks” in the end…

In urban legends, taking risks is always jumbled together with “bravery”. This sort of mixing up of concepts might not be too risky in daily life, but in trading markets this sort of mixup is often deadly.

If you want to escape “the fate of leeks”, a concept you must learn is:
* Don’t take on risk if you can avoid it…
* Even if there is a time when risks must be taken, then let the fools take risks while you observe from the sidelines and gain experience.
I had colleague at New Oriental who went to Oxford’s Saïd Business school to get an MBA. After he returned, he told me that in the first class the professor wrote these words on the blackboard:

Use other people’s money!

If I had the chance to open a world-famous business school, I would definitely put this sentence on the walls and make students remember it for the rest of their lives:

Watch other people taking risks!

10. What’s even scarier is takings risks without taking into account the costs…

Leeks are different. They like taking risks, but they don’t even know how to calculate risk. Yes, risk can be mathematically calculated! But leeks have never calculated it, and they’ve never even thought that they should calculate it. So do you think they can win? If they did win, wouldn’t that violate heavenly principles?

11. What’s really the best way to set a stop-loss line…

Truly good suggestions are always actionable. The problem with the so-called “suggestion” of “don’t be too greedy” is that it is basically not actionable. You can think about it, but there’s no way to do it.

Anyway, when setting a stop-loss line, you must not depend on wishful thinking. At least now you know that there is one factor you can count on:

The daily volatility of the trading target.
You can estimate the “daily volatility” of a trading target. If the daily volatility is 25%, your stop-loss line — in other words, “the biggest loss you can bear” — should be greater than 25% (40%, for example)... Because risk is what you are considering - especialy strong price volatility in trading markets - **"preparing for the worst" is always more prudent than "blind optimism".

12. Frequency is the factor that decides everything…

There’s an “elephant in the room” — one of those phenomena that is obvious but that people ignore:

The higher the trading frequency, the closer it is to a “zero-sum game”.
So if leeks want to turn things around, I’ll say it a million times, there is only one road to take:
Reduce trading frequency… Reduce, reduce, reduce.
The result of frequent trading is an accumulation of trading fees, which will accumulate until they eat up all of your profits and principal…

13. Who’s really cutting whose leeks in the end…

If you observe carefully, you will see this truth:

Often, so-called “leeks” are not cut by others; it is more common for them to cut themselves!

14. If only I’d bought here or there…