Zhou Guannan criticizes short-term trading as unfavorable to retail investors! Renowned trader "Giant Jie" strongly responds

Professor Zhou Guan-nan from National Chengchi University Business School recently criticized short-term trading as a zero-sum, detrimental gamble for retail investors that does not create social value. Renowned trader Giant Jie strongly countered, questioning Zhou Guan-nan’s theory as detached from practical reality and lacking understanding of actual trading applications. Benson, founder of CoinKarma, believes that both short-term and long-term trading have their roles in the market; providing liquidity and price discovery are equally important. This debate between academia and practitioners has sparked widespread discussion in the investment community, revealing fundamental differences between theory and practice.

Zhou Guan-nan’s Zero-Sum Gambling Theory

Zhou Guan-nan posted on Facebook that the total profit and loss in short-term trading sum to zero, meaning winners earn exactly what losers lose, so short-term trading does not generate any positive social value. He used the metaphor of playing mahjong during Chinese New Year, emphasizing that without taking a cut, the total funds at the table remain unchanged. However, the stock market is not “without a cut”: broker commissions and government transaction taxes turn short-term trading from a zero-sum game into a negative-sum game.

Zhou further pointed out that over time, the losers tend to be retail investors with less information and tools, while the real beneficiaries are professional traders and market makers. He criticized many retail investors for entering the market impulsively without understanding financial theories or market rules, even paying “trading mentors” for lessons—an absurd situation. The core logic of this argument is to categorize short-term trading as a zero-sum game, and after accounting for transaction costs, conclude that retail investors are destined to lose.

From an academic perspective, Zhou’s argument is based on the Efficient Market Hypothesis. This theory states that market prices fully reflect all available information, making it impossible to profit consistently through technical analysis or short-term informational advantages. Under this framework, excess returns from short-term trading are merely luck, not skill. This academic view is widely supported in financial economics but remains controversial in practical trading circles.

Zhou’s criticism touches on sensitive nerves in Taiwan’s investment education market. In recent years, many “trading instructors” and “financial influencers” have sold courses and subscription services via social media, promising to teach short-term profit techniques. These courses are expensive, ranging from tens of thousands to hundreds of thousands of TWD, yet there is little evidence that students can achieve sustained profits. Zhou’s critique essentially questions this industry chain, suggesting retail investors are misled into a disadvantageous game.

Giant Jie’s Practical Counterattack

Renowned trader Giant Jie expressed very strong opposition to Zhou Guan-nan’s views, directly criticizing his stance. He argued that the theories Zhou mentioned—such as the Interest Rate Parity, options pricing formulas, and the Capital Asset Pricing Model—are not inapplicable in practice, but depend on whether one knows how to use them. He pointed out that many researchers with deep academic backgrounds have already integrated these theories with quantitative, statistical, and AI techniques, actively participating in markets and achieving results.

Three Main Points of Giant Jie’s Counterattack

Theories Can Be Applied Practically: Financial theories combined with quantitative, statistical, and AI techniques have proven effective in practice; the key is execution ability.

Existence of Long-term Profiters: There are indeed traders who can profit long-term through discipline and professionalism; this cannot be dismissed outright.

Questioning Scholars’ Motives: Academics posting fierce opinions online may be using such statements as clickbait; more emphasis should be placed on integrating theory with practice.

Giant Jie further stated that dismissing all short-term trading as a negative-sum game ignores the fact that some traders can indeed profit long-term through discipline and expertise. He questioned whether Zhou Guan-nan truly understands and practices what he teaches, implying a gap between academic theory and market reality. Additionally, he questioned the motives behind scholars’ aggressive online statements, suggesting they may serve to incite conflict and attract traffic, and called for the academic community to focus more on combining theory with practical application.

This kind of rebuttal exemplifies the typical stance of practitioners. Many professional traders believe that academia’s understanding of markets is overly idealized, neglecting microstructure, liquidity asymmetry, and information processing speed. They emphasize that trading is a craft, not just a game of probabilities; experience, discipline, and psychological resilience are crucial to success. Essentially, Giant Jie’s response defends trading as a legitimate profession.

Benson’s Neutral Perspective and Market Roles

Benson, founder of CoinKarma, offers a more balanced view from the perspective of market mechanisms. He states that although he has taken Zhou Guan-nan’s courses, he does not agree with labeling short-term trading as “immoral” or “illicit.” Benson points out that short-term traders provide liquidity, facilitating price discovery; long-term investors supply capital and patience to support corporate growth. Both roles aim for profit and are morally equivalent; there is no hierarchy.

Benson’s argument touches on core aspects of market microstructure. Liquidity is vital for market functioning; without short-term traders providing real-time quotes, long-term investors would find it difficult to enter and exit positions smoothly. Price discovery relies on rapid reactions to information from many traders; although a zero-sum process, it is essential for market efficiency. The market’s effective operation depends on the coexistence of these different roles.

He also admits that most retail short-term traders tend to lose money, but this does not negate the possibility that some can profit through skill. Regarding individuals sharing trading experiences or offering courses, Benson believes criticism should be measured; he bluntly states, “With that amount of capital, even a fixed deposit earns faster than running a course.” This implies that truly successful traders have little motivation to sell courses, as their trading gains far surpass teaching income.

Benson’s stance does not fully align with either academic or practitioner extremes but seeks to reconcile both. He acknowledges structural issues pointed out by Zhou—such as retail investors’ informational and tool disadvantages—but also recognizes that professional skills can lead to profits. This pragmatic attitude reflects a deep understanding of market complexity.

Deeper Issues Revealed by This Debate

The debate between Zhou Guan-nan and Giant Jie fundamentally reflects the divergence between academic and practical views of market nature. Academics emphasize statistical regularities and long-term probabilities, believing that due to transaction costs and information asymmetry, retail short-term trading is doomed to fail. Practitioners focus on individual differences and expertise, asserting that discipline, technique, and experience can overcome structural disadvantages.

Neither side has absolute correctness; both touch on truths about markets. Zhou’s warnings serve to protect novice investors, reminding them of the risks and costs of short-term trading. Giant Jie’s counterargument affirms the existence of skilled traders who can profit long-term, emphasizing that markets require diverse roles to function effectively. Benson’s neutral stance underscores that a healthy market depends on the coexistence of different participants.