Trend Following vs. Reversal (1)

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Serial: “Trading Philosophy” …… 4

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Every day I write some kind of text and think, “I want a break,” yet when I consider the fun of words, I never truly tire of it.

The Japanese Yamato language’s expression of appreciating flowers—“mede(ru)”—is a truly beautiful expression.

Lately, people exchange words with a light mood like “Chō saikō” (super awesome), which has a certain briskness and is fine, but using something like “this is the utmost” is very refined, isn’t it?

The fun of Japanese also shows in numerous wordplays.

“Now, haratta, haratta!

If you haratte, it’s bad for the old man’s head; if you don’t haratte, you can’t eat the lantern shop!”

(It’s utterly inappropriate to hit the head of the family. But a lantern shop’s job is to light up.)

This is a phrase from the gambling hall.

We’ve moved from Yamato language to the most common, down-to-earth topics…

Not only in gambling but also in the market, the word “haku” (to bet) is used.

“That person bets, right?” meaning “takes a large position,” with nuances like “cannot imitate” or “risky.”

Using expressions like this may be limited to older industry people, but terms like “trend-following” and “contrarian” are active market terms today.

People say, “Professionals bet against the trend,” but I feel many end up injuring themselves by acting exactly as said. As prices fall, they buy more, lowering the purchase price, but in reality they simply create a position that goes against the trend.

Contrarian investing means,

“To judge that the decline is nearing a bottom,”

and

“to buy gradually in a careful and planned manner,”

a technique to start buying a little earlier.

So what is “trend-following”?

In the next issue, I will explain in detail.