Stephen Ross (one of the most outstanding scholars in the creative theory of the investment revolution) once said: "… Neoclassical theory is a shark theory, not a rational economic theory of human beings, and this is the fundamental difference between finance and traditional economics … Arbitrators with good financial constitution will seize these opportunities (arising from behavioral fallacies), rush into them and end the abnormal price difference with their actions" (quoted from "Investment Concept Evolution").

generally speaking, legal persons in the market (hereinafter referred to as big fish or sharks) have their advantages, but natural persons (hereinafter referred to as small fish) are not all at a disadvantage.

through this article, I put forward my views. In my opinion, the disadvantages of sharks are as follows:

1. Legal person's capital position is large, so it is inevitable that there will be high liquidity risk (especially when the market changes dramatically), so the algorithmic trading I mentioned in another article must come in handy.

2. Transaction restrictions (laws and customer restrictions). In terms of investment letter, you must have a basic shareholding if you can't empty it; Of course, the flexibility of the self-operated department or foreign capital is higher. (I don't know if this is the reason. In recent years, the average performance of so-called professional investment funds can't exceed the broader market).

3. Unable to flexibly change the strategy (fund target). Many funds (* * * same or hedge funds) will forecast their investment strategies when raising funds, but if the original investment strategies fail, they still have to operate based on the promises made at the time of fund raising.

4. It can be observed (that is, it can be controlled) and contained by competing with each other. Based on the third reason, the operation strategy of the fund legal person has to be put into the market for observation, so there is room for being opposed, and the opponent may come from other sharks who do not need to disclose the strategy.

5. if you don't understand the market, you need to do it. Fund managers have no right to understand the market (if they do, they will lose their jobs), and they have to do it if they don't understand it. But the market doesn't always have a market, and fund managers really have a hard time.

6. agency problem. If corporate traders do not operate their own funds, they will inevitably fall into the contradiction of "agency problem" If you want to compete with the market, you may not get a relative performance bonus if you win, but if you lose, you will have to leave. The book "New Finance" has a detailed description on this point (please refer to other Po articles).

But sharks also have their advantages. The advantages of sharks are as follows:

1. Analysis and technical advantages. Legal persons have financial resources and can obtain the best quotations and the best weapons. In the article "Equal Colony Trading System", netizens can get a general idea of how legal persons scan orders through information technology. If there is any leftover meat, they may have to think about whether it will come too easily. I think the so-called guava list should not be in the hands of small fish.

2. get the second to third level information. In the book "Financial Psychology", market information is divided into four levels, and ordinary investors can obtain the first level information that may be misled (that is, public information); However, the second-level information that can't be obtained (the insider information visited in person can be obtained by the legal person through the investment department) and the third-level information (the information about how others, especially novices, operate can be obtained by the legal person through the brokerage department). As for the fourth level information (what is the minority strategy in the market), it is difficult to obtain regardless of the size of the fish.

3. Close to the market (fast market) advantage. Legal persons are more likely to obtain first-hand quotations, and they can connect to the trading market faster without the entrustment process.

4. transaction cost advantage. Large transaction volume and placing orders through your own brokerage department should all be able to gain transaction cost advantages.

5. Capital advantage. This advantage is particularly obvious when there are enough silver bullets and even the market direction can be controlled, and international speculators such as Soros are mentioned in relevant Po articles.

Therefore, if you are a "small fish", you should avoid its front and attack its weakness. The feasible ways of fighting are as follows:

1. Use new tactics (special indicators) that you have developed but are not known in the market (so-called minority tactics)

2. Fight guerrilla warfare, change your tactics and get in and out quickly, and run when you make money; Just like the Vietnamese militia and the Afghan militia, they have no weapons advantage and have the opportunity to fool American soldiers.

However, as long as human greed and fear remain, sharks will not die, because there will always be food to feed them and enter the hunting grounds.

Given the right time and the right place, smart fighters will choose the battlefield that is beneficial to them. For example, ask, "If crocodiles and leopards fight, who will win?" ",the answer is" see where the battlefield is? If the battlefield is in the swamp, the crocodile will win; If the battlefield is on the prairie, the leopard will win. "

The purpose of writing this article is not to discourage small fish, but to remind investors that there is a big battlefield for trading (domestic stock options, or foreign markets; Not even in the financial market), there are many strategies (speculation, arbitrage, spread or market-making transactions), and the tactics are more complicated (daily trading, intraday trading or Tick trading, etc.). We should always stand on the opposite side and check our strategies, whether we have missed anything, and what are the conditions for winning. The law of the jungle.

the weak will be eliminated, and the strong will be stronger. ,