Retail Investors Trapped in Algorithmic Hunting, Human Traders Write "Surrender Letters"? "Anti-Quant Strategies" Go Viral in Private Equity Circles

The Daily Economic News Reporter | Yang Jian
The Daily Economic News Editor | Peng Shuiping

Recently, the A-share market has been continuously adjusting, and quantitative funds have once again become the focus of public discussion. A sudden trend over the weekend titled “Anti-Quantitative Harvest Strategy” has sparked widespread debate in the private equity circle.

Currently, the trading ecosystem of A-shares is undergoing a fundamental transformation. Thanks to high frequency, high precision, and homogenized operations, quantitative trading has shifted from a supporting role to a dominant market force. Trading counterparts have changed from ordinary investors filled with human emotions to AI algorithms running 24/7, cold and emotionless machines.

This shift has completely changed the logic of A-share trading. Traditional short-term strategies used by ordinary investors have seen their success rates plummet, leaving them trapped in the “hunting” of quantitative algorithms. Even seasoned investors like “Stock Enthusiast Liushahé” have helplessly written “The Human Trader’s Guide to Quantitative Trading” as a farewell. So, in a market dominated by quantitative trading, how can ordinary investors avoid being harvested?

Quantitative Hunting in A-shares, Veteran Investors Helplessly Write “Farewell Letters”

The ongoing transformation of the A-share trading ecosystem has profoundly impacted market participants. Thanks to its efficient data analysis, precise execution speed, and homogenized operation mode, quantitative trading has rapidly risen, completely reshaping the trading environment. Ordinary investors face inherent disadvantages in information access, analysis speed, and execution, leading to a significant decline in the success rate of traditional short-term strategies and falling into the trap of precise quantitative “hunting.”

As this shift continues, the proportion of market share held by quantitative trading is increasing daily. Its presence is especially prominent in small-cap, micro-cap, and hot-topic sectors.

Data shows that the number of private equity funds with over 100 billion yuan in assets under management has surpassed those with subjective strategies of similar size. Top quantitative firms have dedicated supercomputing centers capable of analyzing over 10,000 trading factors—from market news and investor trading habits to individual stock genetic traits and order volume changes—forming a large-scale, systematic trading framework.

The core operations of quantitative trading hit the weaknesses of ordinary investors’ trading behaviors precisely, causing retail traders’ traditional methods to repeatedly fail. A veteran investor lamented on social media: “Logic no longer works; tungsten prices keep rising, but tungsten stocks in the market are falling worse than anyone; transformer orders explode, but Tebian Electric (TBEA) has fallen for four consecutive days with large bearish candles; nuclear power stocks, which looked great over the weekend, opened lower and continued to decline. Technical analysis can’t beat quantitative trading. Even with fundamentals, it still comes down to trading techniques.”

Notably, veteran investor “Stock Enthusiast Liushahé” even wrote “The Human Trader’s Guide to Quantitative Trading” as a reflection of how passive ordinary investors have become in the game against quant algorithms, highlighting the profound impact of quantitative trading on the A-share trading ecosystem.

Beware of Human Nature Dislocation, Return to the Essence of Value Investing

The existence of quantitative trading makes the A-share market more professional and brutal, forcing ordinary investors to abandon short-term speculation and return to the core of value investing.

Chen Xinwen from Heizi Capital told reporters that liquidity crises are essentially indiscriminate sell-offs, but value reversion will eventually occur. When quantitative models based on volatility control reduce positions passively, and fundamental factors temporarily fail, high-quality assets may experience irrational discounts—precisely the window for long-term capital deployment. However, Bin warns that “collapse” should be understood more as a deep concern about crowded strategies and regulatory lag.

Data shows that by the end of 2025, the scale of domestic quantitative private equity funds has exceeded 1.8 trillion yuan, accounting for over 30% of private equity securities funds, with market influence becoming undeniable. Chen Xinwen pointed out that quantitative reduction is not based on company value judgments but is a mechanical execution of risk budgets. This means that even fundamentally sound blue-chip stocks are not immune in systemic deleveraging.

Chen Xinwen emphasizes that what we should truly be wary of is never the quantitative techniques themselves but the dislocation of human greed and risk perception—when everyone embraces the “algorithmic holy grail,” it may be time to return to subjective research and analysis. The market always rewards those who penetrate noise and adhere to long-term principles, and this confidence is what allows us to navigate cycles.

Private equity veteran Dan Bin has also clearly stated, “The only way to beat quant is value investing.”

Five Major Strategies! How Ordinary Investors Can Break the Deadlock and Avoid Quantitative Harvest

For ordinary investors, the “onslaught” of quantitative trading presents multiple practical challenges. However, in a market dominated by quant, there are still ways out. The key is to abandon traditional methods, adapt to quant logic, adhere to contrarian, non-routine, long-term, and disciplined operation principles, and learn to “dance with the algorithms.” Industry experts suggest that, considering the characteristics of quantitative trading, investors can adjust their strategies in five key areas:

1. Focus on medium- to long-term positioning, abandon high-frequency trading. Quantitative profits mainly come from intraday and short-term volatility, but ordinary investors should prioritize trends and fundamentals, extend holding periods, and avoid the 90% of areas where quant harvesting occurs. Data shows that retail investors holding stocks for over a year have a success rate more than four times higher than short-term traders. Select stocks with solid fundamentals and clear logic, reduce monitoring frequency, and hold long-term to escape the short-term game of quant.

2. Avoid “hot zones” dominated by quant, choose quality targets. Quantitative trading has a clear advantage in micro-cap stocks, stocks with no earnings, and stocks with continuous high openings. Ordinary investors should steer clear of these and instead focus on large-cap blue chips, industry leaders, stocks with confirmed earnings, and those heavily held by institutions. These stocks have large market caps, solid fundamentals, and are less susceptible to control by quant funds, with prices more aligned with intrinsic value, helping to smooth market volatility.

3. Cultivate anti-quant behaviors and establish fixed trading rules. Quant funds love to harvest retail investors’ chasing highs, panic selling, and heavy positions. Therefore, investors should avoid chasing highs, panic selling, or going all-in; instead, adopt staggered buying and selling, set strict stop-loss and take-profit levels, and enforce discipline to prevent emotional trading triggered by algorithms.

4. Use “institutional thinking” instead of “retail intuition” to reduce market noise. Abandon the retail mindset of watching order books and guessing short-term moves; focus on core fundamentals such as company performance, cash flow, and industry trends. Operate with a focus on buying on dips in the right tail, avoid active trading during high-volume periods, and consider using index funds or sector ETFs to diversify and smooth out volatility, locking in market beta.

5. Reduce trading frequency and improve win rates. High-frequency trading is an advantage for quant but a disadvantage for retail investors. Keep weekly trading to once or less, which significantly increases success rates. Focus on a few high-quality stocks, buy when prices dip to previous lows, and take profits near previous highs. Instead of competing with quant on short-term price differences, seize medium-term opportunities, and act decisively when the time is right—“don’t trade just for the sake of trading; wait for the right moment, even go to zero if necessary, and act decisively when it comes.”

Cover image source: Meiri Media Asset Library