Abandonment of "hitting the target"
Nintendo Co., Ltd. (7974), listed on the first section of the Tokyo Stock Exchange, is a global game console manufacturer, but it originally started as a company that made karuta, playing cards, and hanafuda. It grew rapidly with the Famicom in the 1980s, and its business model underwent a major transformation.
By the way, there is an explanation that the origin of the company name comes from the phrase “putting one’s all into the person and waiting for destiny to unfold,” but some say, “we left the fate to the heavens and it was quite haphazard” (laughs).
Perhaps that easygoing mindset contributed to the current prosperity. It’s just a conjecture, though...
As traders like us, we make thorough forecasts about the future stock price.
Of course, without those forecasts, we can’t buy or sell.
But in reality, we win and lose… Basically, we rely on the market.
However, deciding your next move after watching the stock price move on its own in the market is up to you.
There, you have your own conviction that “it will go up” or “it will go down,” your own “truth.”
When you think it will rise, you want to establish a solid long position.
Aligning thought and action is important.
Whether it will rise as you expect is uncertain; to be frank, it’s a coin toss, but you have no choice but to take a position in line with your own truth that it will rise, so you buy properly.
Therefore, instead of placing aggressive limit orders, you place market orders boldly; this part also reflects the sense of “relying on the market.”
Now, you seriously make forecasts, but you don’t know whether you’ll be right… A forecast is only a trigger for action.
Then, even if you get excited thinking “it will go up, right!” there’s no point, and unnecessary emotional swings would only be detrimental. Even if you can’t be an emotionless “trading machine,” you should aim to be a prudent practitioner with small emotional fluctuations.
“Well, if I’m right I’ll hold for a bit. But if the forecast turns, there’s nothing to do but cut.”
In other words, it’s like taking a stance of “abandoning the aim to be right.”
Unless you’re engaging in illegal activity like stock price manipulation, you cannot control the price. It’s always “left to the market.”
Then, rather than putting in unnecessary effort, approaching with an attitude of “it would be nice if it goes up, and we’ll deal with it if it turns” seems more natural, allowing for calm and accurate judgments.
Of course, with discretionary trading, you need some emotional investment to forecast or decide on position management.
On the other hand, if you decide in advance with rules and judge buys and sells mechanically, it becomes easier to approach the above attitude of “it would be nice if it goes up, and deal with it if it turns.”
The “Chugen-sen” proposed by the Lin Investment Institute is a practical trading method that makes such explanations plausible.
Without fear of misunderstanding, if I say it outright,“Chugen-sen abandons the aim to be right”that is what it means.
But that doesn’t mean you take pointless positions.
There is a solid criterion to decide “sell” or “buy.”
In addition, there is a three-part position management to respond while watching market conditions.
This “flexible response” can be clearly divided into two parts.
One of them is“counter-trend”.
You bought thinking it would rise (since it’s a three-part division, to be precise you “started buying”), but it seems it may go down… If that happens, you won’t stubbornly hold on; you reverse your position and short sell. This response is fully rule-based.
However, you leave the “in-trend” side alone.
Even if prices jump by 20% suddenly and you’re rolling in profits, or gradually rise over six months with gains of over 30%, as long as you don’t see a downward reversal, you maintain the long position.
This approach allows you to extend profits in large price swings, whether prices go up or down.
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