The Essence of Ultra-Short-Term Trading

I define ultra-short-term trading as T+1 or T+2, meaning buying today and selling tomorrow or the day after. The essence is chasing stocks that can surge significantly or achieve consecutive limit-ups to secure quick profits. The operational process involves reviewing the market, selecting stocks, setting a plan, deciding whether to buy or pass, and exiting if the stock doesn’t hit the limit-up the next day—repeating this cycle.

So, what is the true essence of ultra-short-term trading? It boils down to three words: don’t lose. Some might laugh and say, “How is that possible?” Let me explain. Here, “don’t lose” means avoiding significant drawdowns. How do you avoid major drawdowns? Follow these three rules:

1. Quick In, Quick Out. If you buy today and sell tomorrow, the theoretical maximum loss is 30 points (for limit-up plays on the main board; I don’t trade 20cm limit-ups, so this is my limit). What are the odds of encountering this? Maybe you catch three consecutive limit-ups for a 50-point gain, then take a -30-point hit—you’re still profitable. So don’t worry; as long as you trade quickly, there’s no major drawdown risk.

2. Avoid Potential Landmine Stocks. For example, stocks that have already risen significantly with high turnover for several days, or those with risks like poor earnings or fraud. In short, avoid anything with negative potential. Skip it today, or take a break for a couple of days—why not?

3. Set and Strictly Follow Stop-Loss and Take-Profit Rules. My usual stop-loss is -10 points, and take-profit is 20-30 points, but I start scaling out at 10-15 points. This depends on the situation. For instance, with Jin’an International’s one-word limit-up yesterday, I didn’t reduce my position at 20 points. Today, I scaled out at 21 points profit—no regrets about missing 30 points. A calm mindset is the foundation of profitability.
   
   

Beyond controlling drawdowns, here are a few more points to note:

1. Develop Your Own Strategy. Stick to what you’re most familiar with and consistently profitable at—whether it’s weak-to-strong reversals, first limit-ups, 1-to-2 transitions, end-of-day plays, first pullbacks of leading stocks, second waves, or oversold bounces. Once you have a strategy, commit to refining it—no half-hearted efforts.

2. Find Your Rhythm. This rhythm reflects your market understanding. For example, different phases of the sentiment cycle affect profitability. Some strategies excel when new concepts emerge, others during catch-up rallies, and some in oversold rebounds. Identify your profitable phases over the years, analyze them carefully, and solidify your rhythm.

3. Learn to Rest. True masters of ultra-short-term or short-term trading know when to rest—after big wins, after two consecutive losses, or when anticipating high-risk market conditions. Those who don’t rest and trade daily either write articles (like me, refining quantitative models) or are market makers—the rest are mostly amateurs. Forcing trades often signals a problem. Only trade when confident, and wait for opportunities instead of trading daily. Statistically, daily trading has a loss probability over 50%, rising to 80%+ in bad markets—unless you’re a genius.

Summary: Ultra-short-term trading requires preventing drawdowns, learning to rest, and constant reflection.