Investment or speculation?

I've read some books, and they all mention that to increase wealth, you need to reduce debt and then acquire some good assets, with stocks being a relatively good choice. It seems like once you buy them, you've got the wealth code and can steadily grow your money. But in reality? After a few months of actual trading, I found it's not that simple at all.

Short selling, options, and margin trading—free lunch or sweet trap?

The biggest lesson was when I first opened my account. The books said you could make money out of thin air—a free lunch. I thought I understood, so I went all-in on short selling and even used margin for options trading, only to lose tens of thousands. That period was probably the most painful and difficult in months. I kept thinking about how the principal was hard-earned money from my job, and the volatility was huge with no way to recover. Later, I adjusted my mindset: what's done is done, and the first step to solving any problem is accepting the current situation. I treated it as an expensive lesson—better than making an even bigger mistake later. I admit that using options rationally can be helpful; supposedly, the mechanism was designed to protect the underlying stock. But once you cross the line and start gambling, it's hard to control.

Tens of thousands in three months—luck or skill?

After buying U.S. stocks late last year, I watched them rise and fall, and somehow ended up going all-in on Migu stock when it was in the 30s. It rose all the way to 59, giving me a paper profit of over 100,000, with my return ranking peaking at 9%. I was also doing short-term day trading with a high success rate and even developed a "half-position day trading" strategy. With such a thick profit cushion, I thought there was no way I'd lose money this year no matter what.

Continuous black swans—one week wiped out 100,000 in paper profits, leaving me down 80,000

Margin calls, public sentiment, tariffs—one hit after another. Migu stock dropped 40% from the 50s to the 30s. The ironic part? I was day trading with half my position on margin, thinking at worst it would rebound in a few days. Instead, my half-position rode the rise, but my full position followed the nine consecutive drops, wiping out all profits and leaving me with a max loss of 80,000.

Looking on the bright side, it was a valuable lesson. After a series of black swans, my mindset matured a lot.

A fresh start—how to proceed?

First, avoid margin and leverage. During an uptrend, they seem harmless, sweet, and convenient, but the risks become obvious during volatility or downturns. For example, failed day trading means more falling stocks and direct losses from interest, not to mention the pressure of a margin call.

Second, only day trade after a deep drop, and do it in batches. Stick to the underlying stock because even if you fail, you just need time to wait for a rebound. Aside from missing some profit opportunities, there's no real loss, and the psychological pressure is much lighter.

Back to basics

In the end, we should return to the essence of stocks. Although the current environment is obsessed with speculation, and overnight success stories are always thrilling—and people love talking about daily fluctuations—the essence of stocks is an investment mechanism where companies raise interest-free capital. The truth is, aside from a lucky few, most speculative gains aren't sustainable.

Ironically, I calculated my current holdings and stock prices: if I had done nothing and just waited for the stock to rise to its previous level, the profit would've been about the same or even better than my active half-position day trading. But doing nothing goes against human nature. Stock price fluctuations and paper gains/losses are addictive.

So the more mature approach might be:

Pick good stocks and focus on long-term trends rather than current noise. Mentally, pay less attention to short-term paper gains/losses. Lately, it seems like I've lost money—it keeps reminding me that I'm down tens of thousands and my ranking has dropped dozens of places. But you know it's nonsense because without actual cash settlement, it's just a fluctuating number. There's also the seemingly thoughtful "relevant info" pushed to you, but in reality, it's chaotic. Good news doesn't always mean a rise, and bad news doesn't always mean a drop. Information doesn't dictate stock prices; stock prices already reflect information. Everything that happens in a day or week will just be a tiny dot in the broader trend when viewed over months, quarters, or years.
Trade less. Outside of extreme situations, there aren't many truly opportune moments to act. You can safely day trade within a reasonable range to lower costs or pass the time, but the big money comes from patiently waiting for the right opportunity. It's all about good assets at cheap prices—that's how you make relatively stable, significant gains.