Retail Investors Collectively "Surrender" to Quantitative Funds? Industry Experts: Facing Multiple Pressures but Still Have Substantial Room to Survive

Recently, news about “big short-term traders collectively surrendering” has sparked heated discussion in the capital markets. Reports indicate that once-dominant short-term traders have been shattered by quantitative capital, with multiple “surrender letters” flooding the financial circles.

Short-term traders have always been a focus in the A-share market, with their every move attracting investor attention and interest.

Looking back, as the market evolved from rough-and-tumble to mature, short-term trading strategies across different eras have been vastly different. From initial individual “techniques,” to the mid-generation’s short-term speculation, and now to the new generation operating within regulatory compliance for arbitrage. Decades of market淘沙 (winnowing) have seen some big players disappear, while others remain steadfast. This perhaps shows that there are no eternal strategies in the capital market—only investments that adapt to the times.

Facing Multiple Pressures

From the 1990s to the early 2000s, most big short-term traders came from grassroots backgrounds, starting with small capital and gradually growing through compound interest. As the market became more regulated, with trading limits and T+1 rules implemented, some short-term traders sparked waves of rapid trading. Later, the full implementation of the registration system and big data regulation compressed trading space.

“A lot of veteran short-term traders believe in their capital advantage and prefer multi-account quick in-and-out trading,” said a private equity professional in Chengdu. “With system upgrades, it’s now very difficult to evade regulatory scrutiny for abnormal trades.”

“That so-called surrender of big short-term traders reflects profound changes in the secondary market ecology, driven by regulatory, quantitative trading, and market environment shifts,” said Feng Huang, partner at Shanghai XieFeng Asset Management.

He explained that on one hand, the regulatory environment continues to tighten. In recent years, authorities have used technological reforms to eliminate advantages in trading speed enjoyed by short-term traders and quant firms; monitoring abnormal trades and stock price manipulation—such as打板 (hitting the limit up), large orders, frequent cancellations, and intraday price manipulations—are now under multiple layers of regulation and constraints. Enforcement has increased, with criminal accountability, administrative penalties, market bans, and account restrictions.

On the other hand, compared to short-term traders, quantitative trading holds an absolute advantage. With millisecond or even microsecond trading speeds, and the ability to analyze the entire market using vast data and AI models, quantitative trading delivers a “dimensionality reduction” blow to manually decision-dependent traders (who typically need minutes to decide). Traditional short-term traders rely on capital and sentiment to hit the limit up, aiming for next-day premiums. Quant algorithms can detect these patterns in real-time and, during limit-up scenarios, execute reverse harvesting via short selling or close positions faster the next day, collapsing the profit base of short-term traders.

Additionally, systemic changes in the market ecology have significantly impacted short-term trading behavior.

Feng Huang noted that after the full implementation of the registration system, the number of listed companies increased markedly, leading to more dispersed capital. Meanwhile, high-frequency quantitative trading remains active but fails to provide sustained long-term liquidity, resulting in many stocks with low trading volume. Market hot spots shift rapidly, lacking continuous main themes, which drastically reduces the success rate of short-term, sentiment-driven, thematic trading strategies.

However, he believes that strengthened regulation aims to create a fair and transparent trading environment for small and medium investors, narrowing the “unfair advantages” of short-term traders through institutional design, and pushing the market back toward transparency and fairness. As long as traders abide by laws like the Securities Law, and work in harmony with regulators, maintaining bottom-line integrity, and relying on deep understanding of industry fundamentals and logic, there remains considerable room for survival.

The “Evolution” of Short-term Traders

It is worth noting that before the massive market ecological shifts, some veteran short-term traders had already upgraded from purely technical approaches to venture capital and fundamental analysis.

Ge Weidong founded Chaos Investment in 2005, using it as a platform for comprehensive layout in both primary and secondary markets. In 2017, Ge Weidong invested in iFlytek, seen as the “first shot of tech transformation by a futures big shot.” Around 2020, he proposed the concept of “investing in great change,” aggressively positioning in tech companies.

Chaos Investment early invested in semiconductor stars like Haiguang Information and Mu Xi Shares. With these companies going public, Ge Weidong achieved excess returns. Reports suggest that on the day Mu Xi Shares listed, he had an unrealized profit of about 20 billion yuan.

In the first half of 2025, Chaos Investment acquired stakes in China Science and Technology Star Map, focusing on deep-sea technology. Recently, Ge Weidong’s associate Ge Guilian also invested in Galaxy Aerospace, sparking market discussion.

From Zhang Jianping’s trading of stocks like Cambrian, it appears he has shifted toward a combination of short-term sentiment and mid-term trend strategies.

There are also failed transformations.

In November 2024, well-known short-term trader “Beijing Trader” registered a private fund called Beige Private Equity, aiming to transition from short-term trading to a more formal approach. However, in July 2025, the Hubei Securities Regulatory Bureau issued a warning letter due to false disclosures in submitted materials. By early December last year, Beige Private Equity was deregistered.

The new generation of short-term traders often start with a higher baseline. Many come from families with substantial capital, and some possess professional financial backgrounds, enabling them to better understand market rules. This allows them to operate with greater finesse.

Born in 1992, Zhang Yu graduated from Zhongnan University of Economics and Law, then studied finance at London Business School in the UK, and previously worked at Standard Chartered Bank.

Reports suggest Zhang Yu is the son of “super trader” Zhang Shouqing. Under his father’s influence, Zhang Yu has been involved in block trading since 2012. Since 2019, he has frequently participated in stock rights auctions and private placements.

Recently, “post-00s” investor Wang Zixu has gained attention, mainly engaging in legal auctions and private placements.

The private equity professional mentioned earlier believes that the top-tier new-generation short-term traders are no longer as individualistic as traditional traders. Their operations are evidently more refined and professional, likely backed by teams. They trade with a long-term perspective, not frequently engaging in short-term speculation, but instead combining company fundamentals and industry prospects to allocate stocks for excess returns.

(Source: Securities Times)