“What do you think is the most difficult and important skill?” a column is currently published on TOYO KEIZAI ONLINE.

Good morning, this is Matsushita.

In stock investing and FX,

what do you think is the most difficult and important skill?

Is it taking profits?

Is it cutting losses?

Is it entry?

Or perhaps, market environment awareness?

After more than 16 years since I started investing,

the skill I think is the most difficult and important,

is

“control of trade size.”

......

I think many people may find this surprising.

Or some may wonder what I’m talking about,

and may not understand.

However, this idea has not changed in over 10 years.

I think it will probably never change.

In investing/trading,

the most difficult and important skill is

the control of trade size.

Trade size directly affects profit and loss,

which means it is essentially risk control.

“How much risk to tolerate”

this control is the hardest of all.

If you want to make large profits,

you obviously need to take larger trade sizes.

However, if you take larger trade sizes,

the losses when you fail become larger as well.

How to do this with clear justification and

increase accuracy tends to become almost a craftsman’s skill

Profit-taking and stop-losses,

entry and market environment awareness

are not much different regardless of who performs them.

However, risk control

varies greatly from one investor/trader to another.

That affects the magnitude of profits and losses,

and the success or failure of the investment.

If you also can establish profit-taking or stop-losses,

entry and market environment awareness,

then please take on the final challenge of controlling trade size.

It is a difficult yet enjoyable challenge.

To achieve larger profits,

this is something you must overcome.