"For market makers, this ID is the most terrifying enemy. This ID is like a blood-sucking machine; regardless of whether the market makers push the price up or down, they only create opportunities for this ID to reduce its cost basis to negative numbers. No matter what they do, it's useless. As for being a market maker, this ID stopped doing that long ago. This ID only acts as the ancestor of market makers. Whoever the market maker may be, if this ID has its eyes on them, they have to pay tribute to this ID." In today's bloody capital market, even top-tier hot-money traders as formidable as Brother Zhao, Fang Xinxia, or Trader Xinyi would never dare utter these words in public.
Over twenty years ago, someone with the Tianya ID "Chan Zhong Shuo Chan" wrote these words on a forum. Youthful, arrogant, and high-spirited, though some doubted, no one could ever refute them. To this day, the posts that the author wrote back then have been compiled into books. Countless people not only study his thoughts, philosophies, and trading techniques over and over again, but also admire his breadth of vision and state of mind!
The Shanghai Composite Index reached 6124 points, and a week beforehand, he predicted it as the top. Proficient in stocks, futures, mathematics, Buddhism, the Analects, and more, Li Biao was such a magical figure. His trading technique was like a fish in water; it took him a little over two years to drive an 8-yuan stock up to a peak of 126 yuan, and then gracefully exit at the high position—this was the A-share market's very first hundred-yuan stock: Yian Technology (now renamed Shenzhou High-Speed Railway, stock code 000008).
In the eyes of retail investors, market makers often seemed like kings, yet Li Biao never took them seriously, let alone retail investors.
That year, trading Yian Technology between 1999 and 2000 became Li Biao's claim to fame. Rumor had it among his friends that during the accumulation phase of Yian Technology, when the price was around 8 yuan, news of the accumulation leaked out. Consequently, quite a few people secretly competed with him for shares, building up hidden positions. To complete his accumulation plan as quickly as possible amidst a stable stock trend, he deliberately released bearish news and dumped his shares regardless of cost, triggering panic-selling among retail followers. In the end, he shook out the vast majority of those hidden positions. The next day, the stock plummeted further, continuing to ruthlessly cleanse retail investors and those hidden positions. On the third day, he directly slammed it down to the limit-down board. In just three days, he made those who had competed with him for shares doubt the meaning of life, question the accuracy of the so-called insider information, and cut their losses on all their shares. At that exact moment, through Li Biao's pioneering limit-down washout method, regardless of cost, he finally succeeded on the third day in sweeping 95% of the stock's shares into his own pockets. Immediately afterward, he began a rapid upward drive, followed by the long, winding road of distributing shares while driving the price up. A little over a year later, on February 15, 2020, the A-share market's first hundred-yuan stock was born. Two days later, it reached its peak, and after consolidating for a few days, it began a slow decline. By this time, Li Biao had basically distributed all his shares at the high position. At that very moment, Kweichow Moutai—now the price ceiling of the A-share market—was tardily listed a year later, with an IPO price of just over 30 yuan.
This ruthless and incisive operation was taken as a case study by many subsequent market makers and hot-money traders. Once they gained experience, more and more people applied it. Even today, many instances of ruthless washouts followed by price surges in individual stocks, shaking off numerous retail investors and riding away, are simply variations of the techniques from that model back then—only even more brutal. (In fact, if you look back at Li Biao's Yian Technology, the three days of high-level consolidation provided plenty of time for you to perceive the risk and pull out. Compared to today's hot-money washout and exit methods, it was truly countless times milder; perhaps people were simply blinded by being in the thick of it.)
When one's own trading techniques already represent the ceiling of the era, the tactics of market makers naturally become second nature. Li Biao treated thwarting market makers in the stock market as a game. When market makers suppressed the price, he would catch the shares. After repeating this a few times, the market makers would have fewer and fewer shares left and would not dare to suppress the price at will. After all, these were shares they had painstakingly collected; if they dumped them all to someone else, how could they make any money?
Perhaps such practices violated the natural order, as it was rumored that Li Biao contracted nasopharyngeal carcinoma and passed away in 2008 at the tender age of under 40. (The identity of the author of Chan Zhong Shuo Chan is generally interpreted as Li Biao, with another interpretation being the fund columnist Muzi. Many people believe the two are the same person, but because the internet was not so developed back then, certain doubts still surround him. We will not delve deeply into that here.)
No matter how later generations evaluate Li Biao, he remains an undisputed myth in the A-shares.
What Meng Yang asked Bai You to study was the concept of fractal patterns in Chan Theory, because in Chan Theory, all bottoms begin with a bottom fractal, all tops begin with a top fractal, and price movements ultimately tend toward perfection.
Chan Theory is essentially a very profound book. Those interested can study it on their own. Its profound content and broad scope have made Chan Theory an object of frantic pursuit by many, turning it into "Chanology." The book doesn't actually contain many trading techniques; rather, it offers more of an interpretation of the "Dao." In this novel, we need to use the fractals within it to make some index predictions, but ultimately, the most crucial point remains the interpretation of the sentiment cycle. If anyone really wants to study sentiment cycles based on this book of mine (surely no such person exists?), please be sure to study for yourself the difference between bottom fractals and top fractals, multi-K-line combined fractals and their strength. As for the concepts of strokes, segments, and central zones within it, they are basically useless in the novel and will not be covered. Those interested can buy the book and read it themselves; in today's world, everything is expensive except knowledge, which is the cheapest. Originally, I wanted to post a diagram to simply learn the concepts, but it requires a certain readership. If this book really gets a chance to take off, I'll add it later.
Still the same saying: everything in the stock market changes, yet the only constant is the cycle that transcends eternity!
Of course, learning this is very simple for Bai You. Look, just the following sentence is enough.
Bai You's new skill—Chan Theory Lv. 1, acquired!