Article statement: All content is derived from the original theory of Chan, combined with my own insights. To gain the most original understanding, one must delve into the original texts.
11. To achieve long-term victory, one must insist on exchanging the smallest risk for the maximum profit. Risk is paramount; there is no distinction between high and low here. Losses are counted in percentages; losing one hundred percent of one billion and one million both result in zero.
12. Just because others abandon me doesn't mean I will take it; if someone snatches it from me, I will definitely give it up.
13. All theoretical tricks about investment attempt to control certain 'input' contents while concealing the results of the 'input' action. Therefore, all related theories must be based on such a logical assumption: there must be a necessary logical relationship and causal chain connecting the input content and the displayed result. This logical assumption is equivalent to saying that the surface of a 'concubine' and its inner essence have a necessary logical relationship, which is absurd. However, in reality, attempting to bypass the 'surface' and directly point to the 'internal' is also an absurd fantasy. Even if there is no necessary connection between the 'surface' and the 'internal,' reality can only move from 'surface' to 'internal.' Those who attempt to deny all 'surface' and directly point to the 'internal' merely mistake some 'surface' for 'internal.' Such individuals will be deceived throughout their lives without realizing it.
14. In the field of investment, no theory can describe the inevitable relationship between such 'surface' inputs and 'internal' results, because this relationship simply does not exist.
15. To make a profit, do not get stuck; this is the first principle of the investment game.
16. There are only two situations in the market: those that can be bought and those that cannot. The principle to adhere to is that no matter what happens, one cannot buy what cannot be bought unless it meets a certain standard and automatically becomes a buyable object. Once the classification principle for buying is determined, one must strictly adhere to the principle of 'only buying what can be bought.'
17. How to distinguish good and bad assets? The first priority is strict capital management. If there is any sign of weakness, one must exit immediately, even if it suddenly strengthens and rises strongly afterward; this must still be done.
18. How to control the rate of deterioration in the buying process? The multiplication principle in mathematics can completely solve the problem. Now the key issue is how to find three mutually independent processes. First, technical indicators only involve price and volume inputs and are not independent. It is sufficient to select a technical indicator to form the buying and selling process. Anyone can design their own independent trading program set, but the principle is consistent: the three program sets must be mutually independent. For example, popularity indicators and capital flow are essentially the same; various technical indicators are interrelated. If three non-independent programs are combined, it has no meaning.
19. To distinguish the quality of assets, three independent systems are necessary. One of the most commonly used systems is the so-called technical analysis. Pure technical analysis is not sufficient. Technical analysis must and can only have an amplification effect within the three independent systems.
20. Technical analysis, at its core, is about classification, which is something almost everyone involved in technical analysis fails to understand. When technical indicators emit buy signals, technical analysts believe it is a divine hint. With this understanding, it is nearly impossible for them to achieve significant success. Technical indicators merely classify all possible market trends completely. Why do technical analysts seem like experts in hindsight but fail in practice? This is the reason.
