The essence of gains and losses in financial markets is that 99% of retail traders get it backwards
The root cause of why retail traders lose money is never that the technology isn’t good enough—it’s that their attribution logic was wrong from the start.
When most people lose money, their first reaction is always to look for news:
Did the Fed speak?
Is the data bearish?
Did the big players smash the market?
Find a reason, and your mind finally feels at ease.
But the truth is painfully stark: news is never the cause of price moving up or down—it’s only an excuse.
Many people spend their whole lives never understanding this: what exactly is price?
Price is not valuation, not what it “should” be worth.
Price is simply the last transaction price agreed upon by buyers and sellers at this moment.
Price rises because someone is willing to take the next trade at a higher price.
Price falls because someone is willing to liquidate at a lower price to exit.
Textbooks say “supply and demand determine price,” and that sentence is basically nonsense.
What truly determines the direction of the market is never retail traders—it’s the concentrated large capital.
Retail trading volume may look big, accounting for about 60% to 70% of the market, but it’s extremely fragmented.
With ten thousand retail traders—five thousand buy and five thousand sell—each cancels out the other, and they can’t create a trend at all.
What can change the course is always institutional capital holding tens of billions to hundreds of billions.
The market’s real underlying logic boils down to four characters: absorb, lift, distribute, then fall.
When institutions build positions, it’s impossible to fill everything in one shot.
They only keep bouncing repeatedly at low levels—grinding the wheel, washing out panic—
and when retail traders despair and cut losses, they quietly step in to take all the bloodied shares.
This is absorption.
After the floating shares are washed clean and the shares on the board are locked,
you don’t need a huge amount of capital for the price to be pushed up easily.
This is the lift.
When it rises to a high level and profits are sufficient, institutions also can’t dump everything at once and directly smash the board.
They will only take advantage of good news, take advantage of the heat, and take advantage of the market’s high sentiment—
and when everyone is crazily chasing the rally, they quietly and gradually distribute the shares to retail traders.
This is distribution.
Once the chips move from institutions to retail traders,
with no big player left to support the board, it’s just retail traders trampling on each other.
The outcome is only one: drift downward, pull back, and keep sliding lower.
One cycle of the market ends, and then it repeats again.
So you may notice a weird pattern:
Good news landing often coincides with the top, while bad news landing often coincides with the bottom.
It’s not that news lies—news is originally a tool the big players use to coordinate their trading.
Then what should ordinary retail traders look at?
The only thing that’s hard to fake: trading volume.
Price can be used to draw lines, it can be matched-and-traded, it can be faked with K-lines,
but real trading volume can’t fool anyone.
As Wyckoff put it in one of the most classic lines:
Trading volume is the market’s effort; price is the final result.
Price drops on rising volume and rebounds on shrinking volume = big players absorb, shorts are exhausted
Price rises on rising volume and pulls back on shrinking volume = big players lock in positions, longs control the market
Once you understand volume and momentum, you’ll understand the true intent of the capital.
If you only look at news and only look at K-lines, you’ll always be led by the nose.
At this point, everyone should understand retail traders’ natural disadvantage:
You don’t have an information advantage, you don’t have a capital advantage, and you don’t have a time advantage.
You’re going up against professional institutions in a rigged game—you’re already the weaker side.
If you can’t outmatch the dealer, the best approach is: don’t fight the dealer—become a shareholder of the market instead.
The highest-level trading wisdom for ordinary people:
Give up timing the market, give up guessing up or down, and give up trying to fight the big players.
Just buy the S&P 500 and the Nasdaq 100 index.
You don’t earn the money from short-term battle.
You earn the money from the long-term economic growth of an entire era.
Individual stocks are a zero-sum game—someone profits and someone loses.
An index is positive compounding—it carries the long-term upward trajectory of countless top companies, human technology, and the economy.
Many people stay up late watching charts every day, studying indicators, refreshing news, and chasing highs and lows.
After busy years, not only do they not make money, they also lose mindset, lose time, and lose principal.
Real long-term profits are often the most effortless:
Hold quality index funds, embrace long-term trends, and leave the rest to time.
Stop being addicted to the illusion of short-term battles.
The market’s biggest opportunity is never about frequent actions—
it’s about standing on the right track and holding compounding steadily.
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