Two reasons not to take profit on the current "high-price selling positions"
Hello, this is Kaoyama.
Every day,
if you keep watching Corona-related news
you may become more sensitive to changes in your physical condition and feel it more acutely,
don’t you think?
In the first place, during seasonal changes
the temperature differences are drastic at this time of year, so
it’s a season when you are prone to illness regardless of COVID, but …
When you just feel a bit unwell,
you might worry,
“Huh, could this be COVID?” and become anxious.
Perhaps because of that, I’m not sure,
after masks,
thermometers have also become quite hard to obtain.
Recently, when I checked our home thermometer,
the battery was dead, so
I went to a nearby drugstore to buy one,
and they were completely sold out.
I understand why masks sell out, but
not only disposable ones,
even thermometers, which you don’t need to own many of,
are selling out.
Considering the possibility of getting infected,
we always keep Pocari Sweat and congee on hand, but
it’s better to be mindful from everyday life
and prepare various things.
Not only Corona, but earthquakes and heavy rains
can happen at any time,
so like trading,
we should anticipate the worst in advance and prepare.
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Has the Nikkei stock average bottomed out?
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Now, since it’s already May,
what I’m curious about is the earnings announcements.
Many companies are
planning to report earnings,
but judging by the current situation, expectations are low.
Also, given the circumstances
some companies may delay their earnings announcements, but
when earnings are delayed, bad figures tend to surface.
Moreover, next week there will be the US employment data release,
and there is a high possibility that numbers will be unimaginable.
Besides earnings and employment statistics,
more and more economic indicators will be released,
and the current world economy will clearly be shown as being in a bad state,
and this will be made evident to the world,
but …
Considering these things,
how do you think the Nikkei will move in the future?
Normally I do not rely on predictions for trading,
but at the very least, I think it is premature to conclude that
“the Nikkei has already bottomed.”
After the March crash,
the Nikkei recovered somewhat in April.
Seeing that, some traders considered it bottomed and
rushed to buy, but …
for example, there is a possibility of the Nikkei reacting similarly to the Lehman Shock in the future,
where the movement may decline again.
From 2007 to 2008,
the Nikkei dropped below 7,000 yen while bouncing a few times.
If you look at the past,
the decline could continue further.
Like the past,
from now, there is a strong possibility that the Nikkei could continue its downward trend.
Of course, there is no guarantee that the market will move the same as during Lehman.
However, given the current world situation,I believe there is a high possibility that the bottom has not yet been reached.
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Reason: “It’s better not to take profits too early on high prices.”
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With all of the above in mind,
I’d like to share my thoughts on how to trade.
In the Stock Academy, the Wave Riding Investment Method teaches
to hold long and short positions through margin trading,
and to profit steadily,
butthe Wave Riding Investment Method also has
an “treasure position.”
This is a position that is highly advantageous and should not be liquidated immediately,
a position that you want to let ride to maximize profits.
A low-price buy position
or
a high-price sell position
is what this is.
So, nowadays,
the high-price sell position
might correspond to this concept.
Therefore,
if you hold a high-price sell position
and have unrealized gains,
it is better to be patient with profit-taking
and continue to hold for a while,
in my view.
“But what if the stock price recovers more than expected
and the unrealized gains disappear,
or even incur unrealized losses?”
There may be concerns, but
If it were me, I would place a stop-limit order so that
even if the price rises more than expected,
I could secure a minimum profit.
Some people might dislike this approach.
If the position is closed at a profit,
you may feel regret saying,
“I could have made more.”
But those emotions are the great enemy in trading.
There is a market aphorism: “Let the head and tail go.”
While the market is ever-changing,
thinking that you can take profits from end to end is arrogant, and
you should approach the market with a mindset of,
“If I can take some profits, that’s good enough.”
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Consider possible short-selling regulations.
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Another reason to keep the high-price sell position as an “treasure position”
is the possibility of short-selling restrictions.
If stricter short-selling regulations are implemented,having high-price sell positions remaining could
enable more favorable trades.
Lastly, to reiterate,the future of the market is completely unknown.
Therefore, it is most important to be able to respond to any situation at all times.
With that in mind, I hope you find today’s content helpful as a reference.
And with that, please enjoy reading until the end today as well.
Thank you for watching.
Keizo Shimo
