What is the proper funding utilization rate?

"I have no money because it's before payday" is actually a strange line, isn’t it?

When you receive money, you don’t think, “I can spend as much as I like.”

There are sudden expenses, wanting to enjoy shopping even with a limited amount, so at least I can understand it more than advertisements for high-interest consumer loans that say “Plan your usage.”

Buying and selling is not the same as shopping, so I know I must calculate things precisely—but I still end up increasing my positions. As a result, even if I become a bad bet, I can’t cut it, and I end up holding it for a long time.

When I feel a chance has arrived, I have no choice but to think about cutting back on something else to balance it. Indeed, it’s like having an allowance before payday, with no extra room.

In the Chugen-sen Ken-tamaho (Middle Source Line Position Method), the capital utilization rate when fully invested is set at 50%.

Half of a single unit, in other words “either buying or selling, half of the funds is the limit” — a strongly safety-oriented way of thinking. Moreover, since it is divided into three parts, even if you continue trading in accordance with the rules, the average capital utilization rate will stay below 50%.

Total capital should be prepared to be doubled

(From “New Edition Middle Source Line Position Method,” Part Two, Main Text)

As introduced in Chapter 18 of the serialization, this is how it is.

Furthermore, even if profits accumulate and the amount of capital increases, it is stated that you must not immediately increase the amount of positions.

Until the total capital amount becomes at least 1.5 times the initial amount, keep to the conventional position unit, and after it becomes 1.5 times, increase the position unit by 1.5 times accordingly.

(From “New Edition Middle Source Line Position Method,” Part Two, Main Text)

This is the content introduced in Chapter 12.

It is extremely stoic!

But like “eat until you’re 80% full” at meals, once you get used to it, it should feel comfortable.

If there is plenty of money left over, you can always increase positions; if a forecast turns out wrong, there is the physical leeway to start over, and a mental margin as well... it is very systematic.

If you compare it to allowance and shopping, it is “buy what you like, when you like, but don’t overspend, and stay out of situations that require balancing” — a controlled degree.

When meeting someone, it is a habit to “leave the house early every time. If you forget something, you can go back for it, and even if the train is late, there’s no need to panic.”

In the FAI investment method aimed at relatively quiet low-priced stocks, the upper limit of capital utilization is 80%, but that is still a matter of momentary maximum wind speed of 80%.

Even if you plan to use about 50%, if you have a bullish outlook, you will quickly approach 80% and start to feel suffocated.

After all, you should avoid the mindset known as “posi-posi illness,” where you always hold many positions, experience withdrawal symptoms when positions decrease, and cannot imagine going to zero... you should not approach such a mindset at all.

However, be careful with word usage.

A prohibition like “you must not build any more” itself is a threat.

Please approach it with a positive image of being “comfortable and relaxed.”