The Underlying Logic of Modern Trading

It points out that the root cause of losing money in trading is not technical indicator failure, but being governed by the "profit-seeking and harm-avoiding" instinct that has evolved over tens of thousands of years. In financial markets, instincts often lead to traps of liquidation; only counter-human nature operations can ensure true survival.

The first step in trading is "self-awareness." The book divides people into three categories: inferiority, arrogance, and confidence. Inferior individuals blindly follow big V influencers; arrogant ones expand leverage after winning. Most traders swing emotionally between these extremes, but confident players can recognize their limits, doing "not arrogant, not inferior," maintaining independent decisions amid volatility.

"Calmness is the foundation of gambling." A trader's mindset should be as tranquil as still water, as solid as a mountain. When extreme market fluctuations occur (such as the 312 crash), panic can overwhelm reason, but only extreme calmness allows you to detach from emotions and see what price level has been reached. Observe when others panic, be cautious when others are greedy, and maintaining your composure is safeguarding your wealth.

Using "momentum" and "chips" wisely is the key to victory. Momentum refers to cycles (such as the four-year halving cycle of cryptocurrencies), chips are capital, tools, and information. Experts never go all-in at once but build positions gradually, leaving room for maneuver. Riding the cycle is riding the trend; going against the cycle is going against fate. Profits should only be amplified when high-probability opportunities appear.

Risk management is summarized as "the art of knowing how to fail well": avoid entering unfamiliar situations, do not heavily leverage without confidence, and cut losses decisively when logic is falsified (the art of destruction). Stop-loss is not surrender but a ticket to survival. When facing losses, act decisively like a "fierce awakener," without illusions or holding onto losing positions. Preserving capital is always more important than chasing opportunities.

The highest realm of trading is "simplicity." Truly profitable methods are often extremely simple because simple rules are easiest to execute. Like a fisherman patiently waiting by the abyss for signals, act when the conditions are right, wait when they are not. Those who internalize simple strategies into muscle memory can triumph in the turbulent waves of the market.