Column published on Toyo Keizai ONLINE: A big pitfall (If you fall into this, you won’t beat the game)
Good morning, this is Matsushita.
Yesterday, Makoto Investment School
Special course: Matsushita's Cycle Theory — Stocks and FX,
And I taught it to the students at the Trading Research Group.
Yesterday's class, for the students,
I believe it was extremely meaningful.
In a small-group live school,
each student's understanding, questions, and challenges
become clear and tangible, and we can proceed while directly
following up on those parts,
which is completely different from ordinary seminars and leads to a deeper understanding and mastery.
Yesterday as well, within the stock school lesson,
I suddenly thought, "I should confirm this,"
so I posed the following questions to all the students.
"What is your entry signal?"
"What is your current biggest challenge?"
In other words, I asked the students to reflect on their own state and think about it.
In response to these questions,
the students answered in various ways,
and particularly for the latter question,
many people answered that
"There are no rules, no fixed rules."
This exactly matched the biggest challenge identified in the
"Individual Investor Performance Survey" I conducted and compiled
earlier last montha survey of individual investors’ performanceswas in its results,
and it matched the main issue for those who suffer losses.
In other words,
"There are no rules, no fixed rules."
is the biggest challenge for individual investors, and
the problem seems undeniable.
However, while listening to the students' answers yesterday,
I realized a big misconception and trap here.
Those who answered "There are no rules, no fixed rules." have a problem not because there are no rules, but because
they do not have a goal or target for which part of the price movement they want to profit from.
If there is no goal or target,
rules will not come to you on their own.
Once individual investors gain some trading experience,
they realize they cannot profit as they are now,
and begin studying and gathering information.
As time passes, they learn that those who are profiting are trading according to winning trading rules,
and they come to feel that they need trading rules for themselves as well.
They then start looking for winning trading rules.
This is where the mistake begins.
Not that a "winning trading rule" already exists in advance, but
there exists only a trading rule that can capture the price movement you want to profit from.
The "winning trading rule" you have been searching for so far does not exist anywhere.
Because you have not given an order for your goal,
"I want to change this price movement into profit,"
you have not set your own goals or targets.
Long ago, in the early Nishinomiya classroom,
there was someone who spoke the famous line, "Life is a coffee shop."
The meaning of this phrase is that
"Unless you place an order,
the product will never come into your hands."
In the same way, investment is a coffee shop as well.
If you want coffee,
you must order it to the waiter or waitress by saying
"One coffee,"
Your investment, saying there are "no rules, no fixed rules,"
was in a state of a customer in a coffee shop who had not ordered anything.
So it is natural that the rules never reach your hands.
Realizing this,
let us first place an order!
"I want a rule to capture price movement X"
From here, the rules begin.
Yesterday's class was an extremely shocking, meaningful session due to this enormous gap,
misconception and trap that I realized was present.
First, let us start by placing an order!
ps
What you need to be careful about at this time is that
the notion of "I want a winning rule" is
an overly vague order,
and it will not change the situation in the end.
To obtain what you want,
you must place a correct order as well.
Please keep that in mind.
