Chapter 123 What is a good trading system?

Medical insurance should be the most investment-worthy project in the country.

Small investment, high returns.

Lin Menghan underwent an operation and stayed in the ICU for a month, which cost more than 600,000 yuan.

Medical insurance directly reimbursed 400,000 yuan.

The remaining deposit was returned directly to Li Feng’s card.

Now, Li Feng still has 1.97 million yuan in his account. After thinking about it for a while, he directly bought 1.5 million yuan worth of Gree Electric Appliances.

Of the remaining 470,000 yuan, 100,000 yuan was used to continue increasing holdings in Kweichow Moutai, 70,000 yuan was used to buy Gemdale Group, and 300,000 yuan was left as a reserve.

Zhao Xinyue opened the K-line chart of Gree Electric Appliances and saw that it had fallen from its highest point of 24 yuan before the New Year to 20 yuan on January 28, a drop of 25%.

She thought for a few moments and said:

"They say that a long-term market will inevitably fall. Look, Gree Electric Appliances has fallen to over 20 yuan since January 8th. It's been stagnant for 20 days. Will it fall further? Moreover, why did you go all in all of a sudden? Why didn't you build a pyramid?"

Li Feng frowned and scolded lightly: "Xinyue, don't gamble on things with low probability. Make decisions that are in line with the general trend."

"Now that the real estate market has started to take off, a massive amount of money is being generated. It won't be long before the hole created by the circuit breaker is filled."

"Don't look at the 18 yuan today. In two months, you won't see this price again."

“Opportunities are rare and never come back.”

"As for why we stopped pyramiding, it's because the market environment has changed."

"The last time we built our positions using the inverted pyramid structure, it was a long bear market. You didn't know when the market would pick up, so you had to build your positions in batches to spread out your costs. But this time, it's clear the housing market has already taken off, and it's hard to say when Gree Electric will start. We have to grab a seat first. You have to make sure you're there when the lightning strikes."

After hearing this, Lin Menghan couldn't help but ask, "Just buy two stocks? Why not diversify into a few more?"

Li Feng shook his head and said, "Investment cannot be too concentrated, nor too dispersed."

"If you concentrate too much, risks will accumulate, and you'll worry about black swan events. If you spread yourself too thin, your energy will be limited, and the risk ratio of the stocks you choose will be lower, which will lower your investment return. Generally speaking, if you have two to three million yuan in funds, it's best to concentrate them on three to five stocks."

"Currently, within my circle of competence, these two stocks offer the greatest certainty. The others either offer little certainty or have a very low risk-to-reward ratio."

Lin Menghan thought about it and decided to use the remaining funds in her account to buy Gree Electric Appliances.

Zhao Xinyue did the same.

Then she rolled her eyes and said, "Menghan, the New Year is coming soon. Let's go to the mall and see if there are any new products."

"Well, Li Feng, are you going?"

"I need to write a manuscript and post it on the forum first. You guys go ahead."

"What kind of manuscript are you writing? A manuscript about how to select stocks and how to trade? Aren't you afraid that others will learn from it?" Zhao Xinyue said.

"Learn?" Li Feng laughed. "I'm not afraid. Even if I write out my trading system in its entirety, there might not be three out of ten people who would actually agree with it. There might not be one out of a thousand who would agree with it and execute it. And there might not be one out of a million who would agree with it, execute it, and persevere."

"Nonsense~" Zhao Xinyue retorted, "Don't let them learn everything by then and starve you, their master, to death."

"Starve to death?" Li Feng couldn't help but laugh when he heard this. He said, "Xinyue, it seems you still don't understand the hearts of stock investors. In this market, more than half of them are hoping to get rich overnight. You can let them hold their positions for three or five days, but if you let them hold their positions for a whole cycle, at least three to five months, and at most seven or eight years, that would be harder than killing them."

"In fact, many stock investors don't even read the financial statements of listed companies."

After a brief pause, Li Feng continued, "Besides, my trading system may not be suitable for others."

"Why?" Lin Menghan was asking again to get to the bottom of it.

Li Feng explained:

"Because there are no two identical leaves in the world, naturally there are no two identical people. My trading strategy is suitable for me, but it may not be suitable for other investors."

"There's no such thing as a one-size-fits-all solution. Stock trading doesn't guarantee profits just by reading a good book. You need to constantly practice, try and error, and perfect your skills to build a trading system that works for you."

"Other people's trading systems can only be used as a reference. Ultimately, you have to make your own decisions with your own funds."

"Then, what is a good trading system?" Lin Menghan continued to ask.

Li Feng thought for a moment and said, "The purpose of our stock trading is to make money, to make a lot of money, and ideally to achieve financial freedom."

“To achieve this goal, your trading system must be able to generate stable profits and achieve financial freedom through the power of compound interest.”

“Stability and compound interest are the best indicators of whether a trading system is good or not!”

“A trading system that cannot consistently generate profits is a fake system.”

Li Feng continued:

“That’s why I repeatedly emphasize that only by looking at the big picture can you make big money. Because only by looking at the big picture and following the big trends can you improve the winning rate of your trading system and thus achieve compound interest.”

Li Feng spoke while thinking, and Lin Menghan listened very carefully, occasionally writing a few words.

Zhao Xinyue couldn't stand it any longer, so she pulled Lin Menghan and said, "Menghan, he's not going, let's go together.

The two of them packed up a bit and left Jingu Building.

Li Feng looked at their departing backs and shook his head, unable to understand the women's train of thought.

Ever since Lin Menghan recovered from her injury and was discharged from the hospital and returned to City B, the relationship between Zhao Xinyue and Lin Menghan has somehow become even closer, like two sisters.

Sometimes, Li Feng feels like an outsider.

After calming down for a while, Li Feng organized his thoughts and posted some of his thoughts on the forum.

At this time, a voice was heard from the corridor: "Xiao Huang, Xiao Huang, hurry, hurry! The fourth rights protection action is about to begin! Hurry and take out the sign!"

It’s already this late, and you’re still defending your rights?

Li Feng pushed the door open and came out, just in time to meet Lao Ning and Xiao Huang, each holding a sign, waiting for the elevator.

"Lao Ning, are you going to defend your rights again?" Li Feng asked hesitantly.

"That's right, NND. The New Year is coming soon. If the developer doesn't return the house to me, I'm going to tear down their sales office!"

"Yes! Smash their sales office!" Xiao Huang said indignantly.

Check out? Smash the sales office?

Check out when the real estate market is about to take off?

Li Feng couldn't believe it.

So he advised, "Lao Ning, don't you watch the news? Houses in Beijing, Shanghai, and Guangzhou are selling like crazy right now. After the first and second tier cities have seen their prices rise, it will soon be our turn."

"Who told you that the prices will increase soon? You don't even know our city. It's such a small place, the prices are so high and the wages are so low. No matter where else the prices go, they can't increase here! I tell you, I've inquired about it. Now that crappy developer has thousands of houses that he can't sell! How is he going to sell them? To whom? A living person can only live in a hundred or eighty square meters at most. Is he going to sell them to the dead?!" Lao Ning retorted.

Xiao Huang also chimed in:

"Brother Feng, you still don't understand. Experts say this round of house price increases in Beijing, Shanghai, and Guangzhou is just a weak rebound. There are too many houses in the market that can't be sold for decades. After the New Year, the housing prices will definitely plummet!"

"Besides, the housing prices in our city haven't increased much in the past two months."

"So, don't buy it now, or you'll regret it for the rest of your life."

"Oh, Xiao Huang, you've said so much, but Reporter Li doesn't understand," Lao Ning said. "Who knows the hardship we're living through? We've bought a house three years ago, and we haven't even moved in yet, and we can't afford to stop paying the mortgage. We live so frugally... I only have 300 yuan a month for living expenses... not even enough for a cigarette..."

"Director Ning, I'm even worse off than you. I only have two hundred yuan a month for living expenses... and I have to deliver takeout at night to make some extra money..."

The two of them complained to each other, then got into the elevator and went downstairs.

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