Know the illusion

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Serial: The Mind of the Market, The Essence of Trading, Part 31

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Every day, many stocks rise and fall and fluctuate vigorously.

It feels as if money is falling right in front of your eyes.

This is the greatest illusion in the stock market.

Previously, I showed practical traders’ view that “the strong vs. weak debate is futile.”

As a general discussion, thinking about “whether it will go up or down” won’t yield an answer, but with a specific way of thinking, you can derive answers for “sell” and “buy.”

However, even when you decide “sell” or “buy” by some criterion, it’s not easy to hit the mark. In practice, you win some and lose some, but you feel like, “I’m not getting it—no way.”

Feeling that you alone are making bad trades around the world is just another illusion.

If you’re losing most of the time, say 80% or 90% probability that it will move—simply reversing buy and sell signals can make you a fortune.

No matter what you bring up, the reality is usually half and half.

Therefore, it is meaningless to argue about strength vs. weakness, and attempts to produce a universal answer for “stock selection” do not hold up.

Providing an answer for “sell” or “buy” based on a particular way of thinking is a matter of judgment, not diagnosis.

Pragmatic and dynamic decision-making that prepares for both when predictions are correct and when they are off the mark.

Being human, we will have illusions galore.

Rather than forcibly resisting them, it is practice to recognize the illusions and adjust our actions accordingly.

A book I recently read that was interesting is,『The Law of Illusions』(Fumiro Nishida, author).

“Success comes to those whose brains have been deceived, and failure comes to those who have been deceived by their brains.”

(From the subtitle)

With the startling explanation that “99% of what you think is true is an illusion,” it shows how our minds work and practical ways to approach it.

Rather than turning to dubious forecasting methods, we should be energized by books like this.