Trading is essentially about dealing with a mentally ill person.

The reason trading is so difficult has only one root cause: we’re facing someone who is irrational, illogical, out of order, and reckless—someone who’s “having a breakdown.”

Normal people act with cause and effect, with boundaries, with rules, and with a bottom line. But the market is completely different. It’s emotional, extreme, fickle, and unpredictable. One second it’s brutally pessimistic, the next it’s wildly arrogant—no reason, no logic, no sense of right or wrong, just whatever it wants, sending you into any kind of move.

Most ordinary people are used to using rational thinking to view the world and common sense to judge patterns, so the vast majority of people lose when they trade.

You’re using normal people’s logic to interpret a madman’s behavior—that alone is the biggest paradox.

This is what makes trading the hardest:

If you try to reason with the market, it only has emotions;
If you want to talk about trends, the market flips at any moment;
If you want to discuss logic, the market is arbitrary;
If you want stability, the market only loves extremes.

When you deal with a madman, you can never persuade him, predict him, empathize with him, or change him. Once you try to understand him, follow him, or merge with him, in the end you’ll only be assimilated—becoming just as crazy, greedy, fearful, and out of control as he is.

But trading also has the simplest part: the madman doesn’t need you to understand him—he only needs you to respond.

Dealing with this manic market requires sticking to just two things from start to finish. As for every other move, every fluctuation, and every temptation—ignore them all, don’t get stuck on them, and don’t engage in any back-and-forth.

First, when the market is deeply depressed, completely sluggish, with no one paying attention and a dead silence everywhere—comfort it and prop it up.
When a particular asset has been bleeding for a long time, with consecutive plunges, falling so badly it’s heartbreaking, and everyone gives up, everyone turns bearish, and everyone fully abandons it. When the madman sinks into extreme inferiority and extreme despondency, we enter to go long at the right moment under the premise that risk is fully controllable—support the trough, and buy the bottom of the extreme emotion.

Second, when the market is extremely euphoric, extremely arrogant, at peak madness, when the whole public is boiling with enthusiasm—hit it and end it.
When the price keeps printing sharp big bullish candles, standing tall and alone—one branch outshining all others—like a flagpole raised high, with crowd sentiment inflated and everyone chasing after the move, greed running rampant.
When the madman is arrogant, looks down on everyone, and emotions are off the charts, we—under strict risk control—decisively short, suppress the extreme bubble, and trade the turning point in sentiment.

Other than these, abandon all the “in-between” markets: neither hot nor cold, range-bound tug-of-war, and ambiguity.

A madman’s normal state is chaos, and chaos isn’t worth trading.
A madman only has two states: extreme despair and extreme arrogance.
We strike only at those two extremes; we watch everything in between.

The ultimate mindset in trading is never about complex techniques, not advanced indicators, and not predicting up or down.
The ultimate practice in trading is always staying clear-headed—never letting the market’s madness drag your emotions away.

If the market goes mad, you can’t go mad;
If the market gets chaotic, you can’t get chaotic;
If the market turns emotional, you must be absolutely rational.

You don’t argue with the madman about right or wrong or who’s better;
You don’t try to reason with the madman;
You don’t let yourself catch his emotions.
You just sit and watch with cold eyes—when he’s despondent you provide the floor; when he’s arrogant you suppress him.

Just these two things are enough.