Reborn in 2012, building a new energy empire

The dormitory was quiet for a long time after the market closed.

Fatty Li opened his mouth, as if something was stuck in his throat.

"Brother Hao..." His voice was a little dry, "I don't quite understand what happened today."

Jiang Haoran closed the trading software and stretched his stiff neck.

The intense focus required for several hours in the afternoon was more mentally taxing than I had imagined.

"Where don't you understand?" he asked.

"Well... it was firmly locked at the daily limit this morning, I thought it was a sure thing and we'd see consecutive limit-ups. You were so calm, why did you sell at the limit-up price?"

"Weren't we bullish all along? Has it peaked already?" Fatty Li pulled up a chair and sat closer. "And if we sell and the price quickly hits the daily limit and then locks it again, won't we miss out on profits?"

Jiang Haoran turned around and looked at Fatty Li.

"The sell orders dropped from 210,000 lots this morning to 140,000 lots. Trading volume also increased." His voice was calm. "What do you think this means?"

"There have been transactions, plus someone... is canceling their order?"

"Yes. Who is canceling orders? Industrial capital and institutional bulls. They placed buy orders at the daily limit up price while simultaneously selling off small orders."

Once the sell order is filled, they cancel their buy order; this is called selling at the daily limit up.

Jiang Haoran paused for a moment, "There's another possibility: speculative funds that can't buy are canceling their own orders, creating the illusion that the order book is unstable, in preparation for dumping the stock."

Fatty Li frowned as he pondered.

"In either case," Jiang Haoran continued, "if the number of buy orders falls below 100,000 and continues to decrease rapidly, the probability of the price breaking through the limit is already over 70%."

"Since we established our position around 3100, we have made a huge unrealized profit. At this point, selling part of our position to lock in profits is the most basic risk control measure."

He tapped the table: "The orders in the account aren't money; money only becomes real profit when it's in your hands."

"Even with huge unrealized profits, they're just numbers. What if today's market action isn't a shakeout but genuine distribution, and the price crashes down?"

"I understand." Fatty Li hesitated for a moment, "Then... you bought back in at the end of the trading day and even added to your position. Don't you need to manage the risk?"

"I was afraid," Jiang Haoran said frankly. "So I observed for more than an hour before buying it."

He pulled up the afternoon's intraday chart and pointed to the area around 3700: "The price plummeted to 3700, breaking through the key psychological level."

"But look here, every time the price drops, large buy orders prop it up. Trading volume increases, but the price stops falling. What does this mean?"

Fatty Li stared at the screen, seemingly understanding but not quite.

"This indicates that large funds were at the 3700 level and absorbed all the panic selling," Jiang Haoran said.

"If it were a genuine sell-off, the major players would have dumped shares without regard for the market, causing the price to plummet and not remain stagnant at this level."

He switched to a chart showing the correlation between stock index futures and commodities: "Looking at the overall market sentiment, there is no systemic risk."

"So the conclusion is simple: this is a high-level turnover and shakeout, not the end of the trend."

"Since the overall upward trend remains unchanged, the area around 3700 is actually a reliable buying point with less risk."

Fatty Li remained silent for a while before letting out a long sigh: "So selling in the morning is to lock in profits and avoid risks. Buying in the afternoon is to assess the situation and add to the position at the right entry point..."

"That's right." Jiang Haoran nodded. "Trading isn't simply about betting on the direction; it's about managing risk and opportunity."

"When the market is good, you should be bold enough to take larger positions, but you must always be wary of risks. The larger your account balance, the more cautious you should be."

Jiang Haoran recalled a story he had read online in his previous life: a retired teacher from Wuhan started with 40,000 yuan in capital and went long on soybean oil futures. Because he correctly predicted the direction and added to his position with floating profits, he was incredibly successful, and at his peak, his total equity approached 15 million yuan.

However, he did not reduce his holdings at the high price, and did not sell even after the stock hit its daily limit up and then hit its daily limit down. But he sold after several consecutive daily limit downs and was forced to liquidate his position by the exchange.

Then, clinging to a sliver of hope that the market might recover, he sank deeper and deeper into debt, until his account balance finally returned to 50,000, as if it were all a dream.

"In this market," Jiang Haoran said slowly, "survival is more important than how much you earn. Especially for ordinary people like us without any connections, every penny is our capital, and we can't afford to lose it."

Fatty Li nodded emphatically, a different look appearing in his eyes.

Jiang Haoran said no more. Some truths need to be experienced firsthand.

He glanced at the forum. After the market closed, the debate between bulls and bears intensified:

[Major Doji Star! Top Signal! Run!]

[What a joke! This is just mid-air refueling! Didn't you see it rallied again at the close?]

I got shaken off the bus today, I'm so upset...

I bought in at the bottom before 3 PM, now I'm waiting for it to hit the daily limit tomorrow!

Jiang Haoran calmly closed the page and shut his computer.

He knew that today was just the prelude to this great battle.

The real, brutal battle has only just begun.

His task is to calmly execute his plan on the battlefield of the ultimate showdown between bulls and bears.

……

He opened his email; the revised draft of the cooperation agreement sent by Shen Mo had arrived.

The attachment contains a 37-page PDF.

Jiang Haoran quickly browsed the table of contents, focusing on several core clauses.

Article 1, Cooperation Structure.

The firm adopts a limited partnership (LP) structure, with Jiang Haoran serving as the general partner (GP) and investment manager, responsible for executing partnership affairs and making investment decisions; and Zhou Mingyu serving as a limited partner (LP), providing priority funds.

The subordinated tranche was fully funded by Jiang Haoran (GP).

Article 2, Decision-making authority.

Article 4, Paragraph 3 explicitly stipulates: "Within the investment objectives and risk control framework agreed upon in the agreement, the investment manager shall enjoy independent and exclusive investment decision-making power without the need for separate consent from the investment decision committee or limited partners."

These are the core terms that Jiang Haoran specifically requested and upheld, forming the institutional foundation for him to leverage his professional abilities.

Article 3, Risk Control Mechanism.

Set clear net asset value warning and forced liquidation lines: When the partnership's net asset value falls by more than 15% from its historical high, the GP must submit a written explanation and response report to the LP; when the fall exceeds 25%, the LP has the right to request a suspension of opening new positions; when the fall exceeds 30%, the LP has the right to request forced liquidation to protect the principal of the priority funds.

This clause was designed for Zhou Mingyu and constitutes the "last line of defense" to protect the safety of priority funds.

Article 4, Fees and Profit Sharing.

This is the core of profit distribution. The terms are designed to reflect the principle of risk and return parity and adopt the "price return first - payment of benchmark return - tiered profit sharing" model commonly used in private equity practice.

Benchmark return: Priority funds enjoy an annualized benchmark return of 10% (also known as "threshold return").

Profit distribution order: All distributable profits of the partnership will be distributed strictly in the following order:

First priority: Full refund of all partners' total paid-in capital (i.e., principal).

Second priority: Pay the aforementioned annualized benchmark return of 10% to the priority partners.

Third priority: The remaining portion after paying the above two items is "excess profit," which is distributed according to the following tiers:

For excess returns, when the annualized return rate is between 10% and 30%, the junior tranche (Jiang Haoran) will receive 40% as performance compensation, while the senior tranche (Zhou Mingyu) will receive 60%.

For excess returns, if the annualized return exceeds 30% but does not reach 100% (i.e., the net asset value doubles), the subordinated tranche will receive 60% of the excess returns, and the senior tranche will receive 40%.

When the overall annualized return exceeds 100%, that is, when the net asset value grows more than twice, the excess return can be extracted by the subordinated tranche up to 80%, and the senior tranche gets 20%.

Management Fee: To demonstrate our commitment to long-term cooperation and to closely align the interests of the GP and LP, this agreement does not charge a fixed annual management fee.

Jiang Haoran's entire income comes from back-end performance sharing, which makes his interests deeply linked to the fund's performance.

Jiang Haoran carefully reviewed each clause.

He highlighted the disclaimer section, requesting that the wording be revised to be more rigorous and professional.

"In the course of performing its investment duties in accordance with the provisions of this Agreement and the principles of industry prudence, if the investment manager incurs investment losses due to systemic market risks, significant policy changes, or other force majeure factors, its personal liability for compensation shall be limited to the amount of the subordinated tranche investment. After all the subordinated tranche funds have been lost, the GP shall not bear any further personal liability for compensation."

This clearly defines the boundaries of individual responsibility, which is in line with the risk allocation practices of such investment agreements.

Regarding the scope of investments, he added the risk diversification requirement: "The scope of investments includes, but is not limited to, domestic commodity futures, financial futures, and other derivatives permitted by laws and regulations."

"To control single-market risk, the peak value of any investment product or related product portfolio shall not exceed 60% of the partnership's total equity."

Jiang Haoran compiled these proposed revisions, along with adjustments to details such as the order of liquidation, reporting cycle, and dispute resolution, into a clear list and replied to Shen Mo.

The email concluded: "Senior Shen, the overall framework of the agreement is very professional; thank you for your hard work. The above are a few supplementary and improvement suggestions, the core of which lies in the independence of decision-making, the limitation of risk and liability, and the clear and equitable incentive mechanism."

"Please communicate with the other party and revise the text accordingly. If there are any disagreements with the LP regarding the tiered profit-sharing ratio, we can negotiate again at that time, but the principle of independent decision-making power and limited liability is the bottom line."

send.

Ten minutes later, Shen Mo replied: "Received. The suggestions for revision are reasonable."

"In addition, regarding the legal responsibilities of the general partner, I suggest adding a supplementary agreement to clarify that, under the premise of compliant operation, personal assets are separated from partnership debts."

profession.

Jiang Haoran replied, "Agreed. Please handle this as well, Senior Brother."