Chapter 2-2: The Logic of Reversal ~ Only the one who killed the "will of the individual" wins ~

The second session of Chapter 2 focuses on the rule-like regularities hidden in the market, i.e., “anomalies (biases).” Why thinking about “why it moves” is meaningless, and how to turn statistical “ distortions” into profits.

【Session 2: Anomalies — Hack the Market’s “Distortions”】

Do not ask why; simply collect the “facts.”

In the investment world, there are many “deep-thinking pros” who try to read behind economic news.

They offer plausible analyses like “Because the FOMC minutes mention this term, the dollar should rise,” or “Gold will be bought as Middle East tensions escalate.”

However, such fundamental analyses and news interpretations are often just “harmful noise” for individual investors.

When I worked as a technician in a small factory, what mattered most when a machine failed was not the philosophical question of “why it failed,” but the reproducible facts of “which part failed, under what conditions, and what defect occurred.”

The market is the same. The reason price moves is only a post-hoc interpretation. What we need is not a reason but the fact that, statistically, prices tend to move in a certain direction under certain conditions.

This is called an “anomaly (bias).”

It is a market tendency that cannot be explained by logic but somehow occurs. I am convinced that this anomaly is the only “sanctuary” where individual investors can compete with cutting-edge AI and massive hedge funds.

The Distortion Created by Japanese Business Customs on “Go-To-Rule” Days

One of the most famous and powerful anomalies is Japan’s “Gotō days (the 5th, 10th, 15th, 20th, 25th, 30th).”

This occurs because many Japanese companies designate these days as settlement dates, causing real demand from importers to buy dollars toward the bank’s “mid rate (9:55 AM公示レート).”

I thoroughly tested the behavior of these “Gotō days.”

I dumped over a decade of data into Excel and analyzed with the zeal of cooking three bowls of rice: when to enter and when to exit to maximize profit.

That work birthed the “Gotō-day Method (EA).”

I do not rely on subjective judgments like “dollar will rise today because it’s a Gotō day.” Instead, when the calendar shows days ending in “5” or “0,” I mechanically enter at a specific time and exit at a specific time. Even as many technical indicators wander, this ensures my account steadily receives “cash from the ATM.”

What matters is that this method doesn’t win because it is based on economic theory, but because it is grounded in the physical structure that causes many Japanese companies to act in that way.

The algorithms that govern the market are complex and strange, but the distortions created by such “human habits” and “institutions” remain a source of profit that will not disappear, no matter how advanced technology becomes.

Monday Morning’s “Window” — a Free Gift

Another anomaly I have used for years is the “Monday window (gap).”

The forex market is closed on weekends, but news continues to flow worldwide. When trading resumes early Monday, prices often start far from the Friday close. In charts, this is called a “gap.”

Statistically, these gaps are highly likely to be “filled” (return to the original price). Large gap-downs (down gaps) or gap-ups (up gaps) present excellent opportunities.

In the past, I would anxiously watch charts on Monday mornings wondering which way they would move.

But after learning the statistical edge of gap openings, Monday mornings became “the time to go pick up money that has fallen.”

“The gap opened, so go the opposite direction.” There is no hesitation there. If the gap is not filled, I cut losses according to the rules. If it is filled, I take profits. It is simply a “work” done repeatedly for years and decades; the probability converges and the asset curve rises steadily.

“Cinderella” and “Good Morning, NY”: The Power of Time

Anomalies are not only about dates or windows. There is also a strong bias in the “time of day.”

The method I developed, called “Cinderella,” targets reversals around midnight. Also, “Good Morning NY” hacks trends at specific morning times.

Why do prices move at certain times? It is because when markets around the world (Tokyo, London, New York) open or close, the composition of participants changes drastically.

The clashes between closing positions and new orders that occur during these transitions create a statistical bias.

For example, the morning trading period known as the “Morning Attack” is often the only real chance in markets that move only near the opening price of the session.

I stopped spending all day watching charts for chances. Instead, I focused on “sniper trades” that target only a few minutes to a few hours when an anomaly occurs.

This dramatically increased my free time.

During my corporate days, I would sneak a peek at my smartphone in the bathroom behind my boss’s back; now I can simply watch for the system’s signals and then enjoy meals with my family and hobbies.

Gaining anomaly-friendly leverage is not just about money; it’s about reclaiming your life (time) from the market.

The Power to Believe in Statistical Edge

In anomaly-based trading, the hardest thing is not “validation” but “persistence.”

No matter how excellent an anomaly is, it won’t win 100% of the time. There can be three or five consecutive losses. When that happens, many people worry the edge no longer works and bend the rules.

However, after 25 years of testing, I know that even if markets briefly increase randomness, they inevitably converge to a statistical distortion in the end.

“It’s fine to catch or not catch.”

To reach this state, you need the unwavering evidence from your own extensive backtesting. Relying on others’ methods alone won’t help you endure a losing streak.

I spent 17 hours a day testing in Excel, filling cells, until I had the absolute confidence that “under this condition, if you do it 100 times, you’ll win 60 times.”

Are you a “forecaster” or a “technician”?

I have a question for you, who has been losing in the market.

Do you want to become a predictor who can foresee what will happen tomorrow around the world? Or do you want to become a technician who calmly harvests small distortions in the market?

If you aim for the latter, now turn off the TV business news and remove complex indicators from your charts. Then flip the past data and extract the “market’s quirks” you alone discovered.

Anomalies are not something visible only to people with special talents. Anyone who can steadily observe data, eliminate emotions, and face numbers with honest effort can find them.

In the next chapter, I will disclose the core logic of the “magical money management method (betting)” to amplify the profits from this anomaly to even more explosive levels.

Let’s expose the mathematical basis of the betting method that can turn 100,000 yen into 300 million yen.

(Chapter 2, Session 2: End) Next, Chapter 2, Session 3: “Zebras and Portfolios: Escaping the Correlation Trap.”