Short-Term Trading Methodology — Advanced Version

During dinner tonight, it suddenly occurred to me that I could explain advanced short-term trading skills in a more concise way.

A. If you cannot analyze the "top pick" of a sector clearly and cleanly, it means you cannot analyze the entire sector at the moment—so you should give up. (Inability to analyze doesn’t mean the sector is bad, but you must abandon it.)

B. Leading stocks, front-row stocks, and arbitrage stocks can actually be simplified into:

• Leading stocks: The growth potential of the sector or logic.

• Arbitrage stocks: Risk-reward ratio and defensiveness.
  (If you can’t identify good growth potential or a favorable risk-reward ratio, give up. It doesn’t mean they’re bad, but you must abandon them.)

C. For opportunities you fully understand, you must go all in. (This is essentially the "Dragon-Empty-Dragon" strategy, where "Dragon" refers not just to leading stocks but any opportunity you clearly comprehend.)
(After all this discussion, the core lesson is how to "stay empty" rationally: abandon all non-optimal or unclear opportunities, even if they might rise.)

D. Beginner tips for early-stage traders:

1. Before truly mastering the skills, limit yourself to 5 trades per month, ensuring each is one you fully understand. The rest of the time, watch the market carefully and stay in cash.

2. Review all sector leaders (which are inherently either clear or unclear), and only trade those you can analyze. If none fit, don’t trade—don’t rely on luck. (If you can’t analyze it but it happens to rise, let it go.)

This strategy is not very useful for big capital or only serves as a psychological guide, but for small capital, it’s a practical and executable approach.

Example with the current market:
Recently active sectors include: Medog, VR glasses, Huawei, group speculation, gaming, monkeypox, cross-border payments, and vitamins.
All these sectors had opportunities, but at the time, I could only clearly grasp partial opportunities in Medog, VR glasses, and group speculation.

Others also had potential, but since I didn’t focus on or analyze them clearly, I passed. It’s not that they were bad—just that I didn’t understand them well enough.

For the "top picks" in these sectors, the combined gains could reach nearly 1%. With proper position sizing, that’s already enough profit.
In reality, "Dragon-Empty-Dragon" trading doesn’t require many opportunities—just ensuring every trade is fully understood.

Our monthly target is just 2%.

The most crucial and hardest part of this strategy is:
Abandoning non-optimal sector opportunities (even if they could make money).
Even arbitrage—I increasingly feel small arbitrage trades aren’t worthwhile. If you arbitrage, aim for high expected volatility. Routine small-board picks are unnecessary long-term, as their risk-reward ratio is too low.

Another advantage of this strategy:
If you stick to it, your analytical skills will improve because you’re always focusing on the best opportunities, where success or failure is very clear.

For example, last Thursday’s late-session opportunity with Dr. Glasses—once understood, it’s highly replicable, clear, volatile, and simple. Far easier than stocks like Stars Technology or Yashi Optoelectronics.

Previously, I suggested one trade per day, but now I think for beginners aiming to improve, 5 trades a month (about 1 per week) is enough. The rest of the time should be spent on tripartite analysis and comparison.