Read Chapter 36 of the Tao Te Ching: Understand the rise and fall, and you are the one who understands the market.

Take a moment to steady your mind and recite the Tao Te Ching repeatedly.
Once you become familiar with it, you can slowly feel its unique charm.
The language of this classic text is actually especially beautiful;
when you read it, it rolls off the tongue. Between the lines, there is
a full sense of rhyme and rhythm. Though the words seem brief, they still hide
an incalculable number of philosophical insights and deep thinking.
The more you savor it, the more rewarding it becomes.
When I first came across it, I actually didn’t like this kind of expression.
I felt the words in the book were too intangible and aimless—what it talked about
couldn’t be seen or touched, like “nothing but talk,”
purely lofty metaphysical principles detached from reality.
It seemed far less practical than texts that lay out concrete methods and techniques.
So at the beginning, I always found it hard to empathize,
and I couldn’t truly understand the deeper meaning within it.
Later, after going through many things—through the ups and downs in
life, work, and the process of doing things—I can say that, after
“a hundred battles,” when I looked back and combed through the path I had taken,
and when I summarized the experience and lessons along the way,
I suddenly had a different kind of insight.
Those specific moves and hands-on methods that I once valued
all have their limits. After the passage of time and changing circumstances,
even though they remain very important, there isn’t that much
that’s worth repeatedly bringing up. Instead, it was the
truths I once thought were empty and metaphysical in the Tao Te Ching that
became the content that could guide direction—worth pondering again and again.
The instructor said that you still need to learn some metaphysical things.
Alright, after that bit of reflection, let’s get back to the discussion.
Chapter 36 Original Text
When one would draw it in, one must first expand it and make it firm;
When one would weaken it, one must first strengthen it and make it firm;
When one would abolish it, one must first promote it and make it firm;
When one would take it, one must first give it and make it firm.
This is called subtle clarity—
the soft and weak conquers the hard and strong.
Fish cannot be removed from the deep;
a country’s sharp weapon should not be shown to others.
In the previous chapter, we talked about holding the Great Image,
and that when the world goes, there is peace and stability—
we also explained that in investing, you must hold fast to the fundamental Way,
and stay away from short-term temptations.
The simple, plain, and unadorned rules are the source of profit you can tap endlessly.
In Chapter 36, Laozi reveals the cycle of market rise and fall,
the logic behind the main force’s positioning, and the foresight wisdom
for trading. This chapter is the mental method for
forecasting turning points in investment, curbing greed and impatience,
turning retreat into progress, and keeping a hidden edge to preserve one’s life.
Once you understand the yin-yang cycle, you’ll understand half of the market’s secrets.
I. When one would draw it in, one must first expand it and make it firm
If you want it to contract and close, you must first let it expand and open.
If you want it to contract, to fall, and to crash,
you must push it to the extreme—an insane surge,
rising so high that everyone loses their rationality.
Put this into investing: this is the core law of a market top,
and the underlying logic of the main force luring people to buy and then distributing.
Before a big sell-off, the market often surges crazily first;
before a trend reverses, it often spikes to an extreme high first.