“Eastern Economic ONLINE column currently published” How to profit by using the daily limit-up (limit up) strategy
Good morning, this is Matsushita.
In the Japanese stock market, regarding intraday price movement,
price movement limits are set, and when there is significant
news or catalysts, buy orders flood in,
and there are times when a circuit breaker triggers a price limit up.
When one owns shares that ride the uptrend to the price limit,
profits can surge all at once.
It is a very pleasant and enjoyable price movement.
In the past, there were price movement limits in the commodity markets as well, but
now a system called circuit breakers for price adjustments has been introduced
and price movement limits have disappeared.
I began to profit in the commodity futures market when there were price movement limits,
and at that time I was adept at riding up to price limit up or limit down.
When I rode the top or bottom,
Combining the commodity market and the stock market,
I have benefited from price limit ups and price limit downs dozens of times.
In particular, in the commodity futures market, when the liquidity is low and
this stop hits during such periods,
it can continue for three or four days,
and capital increases rapidly thereafter.
In the early days, losses increased due to stops, but
eventually that ceased, and I began to profit from price limit ups and
price limit downs.
The cycle-trade I excelled at was
well-suited to using price limit ups and downs for trading strategies.
Because cycle trading targets buy points at turning points from mid-to-long-term decline bottoms and sell points at turning points near the top during mid-to-long-term rises,
and because the market energy has polarized in one direction up to that point,
when materials with the opposite surprise appear,
there is an immediate concentration of contrarian buying and selling,
leading to price limit ups and downs.
In particular, the selling energy from the top range is a bear market move, so it is powerful.
As if falling into an abyss,
a sudden drop occurs, and if you are selling,
capital increases with incredible momentum.
When the turning point changes the tide,
stops tend to occur easily.
Cycle trading excels at attacking this.
Another aspect is trend following,
and if you simply follow the trend,
price limit ups tend to occur at high price levels.
This is the acceleration of the trend.
However, if a huge gap opens up at a top,
that high price can become a new ceiling,
and the start of a decline may follow,
so price limit ups at high price levels require caution.
Utilizing price limit ups in cycle trading is a contrarian approach.
Continuing with the trend and leveraging the acceleration of the rise
is a trend-following approach.
In other words, contrarian and trend-following strategies,
if you faithfully employ both strategies once and continue,
eventually you can expand profits at price limit ups.
Nowadays, you can only experience this in the stock market,
but stock investors should indeed seek rapid profit expansion at price limit ups.
You can ride both contrarian and trend-following approaches!
