Wu Xing, a private equity tycoon with tens of billions of dollars, showed his own experience: How does a researcher transform into a trader?

Guide:

The following is an article recommended for you by Mr. Wu Xing, chairman of Shenzhen Kaifeng Investment Management Co., Ltd. He said: It is to take the transaction as an opportunity to confirm the research, weaken the role of the transaction, and find the core and essence of the research, so as to understand the research deeply. This is also the root of Kaifeng's emphasis on research. Let's take a look~

Source: The Poker Investor

Research-driven trading often means entering the market on the left side and increasing positions against the trend, so the capital curve is prone to large fluctuations.

You may think this statement is rather abstract, let us give two examples to talk about it in detail.

For example, the investor Paulson, he started shorting the crazy US real estate market in 2006. However, he waited for 2 years and carried a huge floating loss of 35% before ushering in the financial crisis and the market plummeting.

For another example, based on fundamental analysis, a large amount of domestic funds began to short crude oil in 2012, but once suffered a huge loss. Two years later, to be precise, in July 2014, crude oil really began to fall crazily.

There are many more such examples for fundamental investors.

Then, how should researchers balance the differences between their own views and the actual market in transition to trading, and how to manage funds?

Wu Xing, chairman and investment director of Kaifeng Investment, replied:

"I also switched from research to trading, and I know the value of research. In the process of transformation, it is a major test of my own research system."

Wu Xing has done 5 years of research, but it took more than 2 years just to switch to trading. In this process, there are two beliefs that he believes should be adhered to:

First of all, we must believe that research has value.

No one can see the market completely right. If they get it wrong, they will lose money. This is a major test of self-knowledge and research value. Only through multiple experiences can research be truly recognized as valuable.

Second, we must believe in the latecomer advantage of research.

Once we have a deep understanding and advantages of a certain variety and industry, we can summarize the methods and applications of researching things, so as to improve the level of understanding of things. Improving the height and breadth of thinking about problems will have important support for the scale of future management funds.

In order to truly transform research into trading, Wu Xing also gave four suggestions:

First, we must maintain the confidence of long-term employment.

Most of the researchers who enter this stage may be around 3-5 years, and the transition from researcher to trader is a crucial transformation in life. Entering this stage, we must maintain peace of mind and patience. Because the trajectory of life will undergo major changes, it is worth our patience to deal with it.

Second, try to choose a low position during the operation.

Most researchers find a good trading opportunity in their research, and they will bet heavily on this seemingly profitable opportunity. In fact, if you participate in transactions with such a mentality, the result is usually skyrocketing and plummeting, which will have a major and long-term impact on your research value and self-confidence, which is not conducive to the accumulation of researchers.

Third, strengthen confidence in the value of research by trading on industry details.

By expanding from the research of a single product to other highly correlated products, or even the research of the entire sector, we can tap more industry trading opportunities and reduce the probability of wrong transactions due to lack of opportunities.

Through price difference and hedging, the influence and impact of external factors can be avoided, so that the trading views can be more directly reflected in the details of the industry. At the same time, it can also avoid a large retracement of funds.

Fourth, you can also consider combining with other traders by providing strategies, so that you can not only give yourself the opportunity to verify research, but also learn other people's trading methods and skills.

In short, taking transactions as an opportunity to confirm research, weakening the role of transactions, and looking for the core and essence of research, so as to fully understand the value of research, is also the root of Kaifeng's emphasis on research.