“What do you think a rule is?”—a column published on Toyo Keizai Online.

Good morning, this is Matsushita.

We conduct our annual survey every January.

From last year's survey,

we have included free-entry sections for the reasons of losses and the reasons of gains,

and with everyone's reflections

we receive valuable opinions

as well.

As last year, the word "rule"appears

in the top reasons for losses and for gains.

In other words, investors who incurred losses

either did not have rules,

or could not follow them,

and investors who earned profits

had rules and followed them,

or their rules worked,

that’s how it goes.

It is understood by readers of this newsletter that

rules are important in investing.

So, what do you think a rule is?

If you have participated in my school or seminars

before, you may have seen the flowchart I always present

that consists of six elements as a rule.

It is the so-called trading rule.

This certainly is a rule.

For example, “If the daily closing price closes above the 10-day moving average with a bullish candle, buy.”

This is the concrete basis for action.

When I explain rules,

I say, “these are the conditions and bases under which you trade.”

If you ensure you trade only when certain conditions or bases are met,

that too is a rule.

In the traders' bible, the book

“Market Wizards,”

the word “rule” appears many times.

Equally, the term “self-discipline” also appears

frequently.

The word self-discipline is,

I would say, synonymous with rule, but

I don’t know which words are used in the original English edition.

Incidentally, I have the English edition of “Market Wizards” and

“New Market Wizards” at hand, so I will look into it when I have time later.

Self-discipline is also important in investing,

and it means acting in accordance with your rules,

in other words, doing what you have decided to do.

If in your stock or Forex trading you continue to act in accordance with clear rules,

you are a person with self-discipline,

and you have a set of rules.

Rules take many forms from person to person,

and that is fine.

What matters is not the form but

the act of executing them.

Understanding rules and self-discipline in that way,

please approach investing with rules in mind.

If you understand it this way,

it might become a little easier.