Characteristics of people who win using the popular method "Undulation Trading"

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“The market is not just a guessing game about whether it goes up or down,”
it is a skill of how to position and how to exit within a fixed amount of capital.
“It is a technique.”


(Keitaro Hayashi)
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Hello, this is Shimoyama.


Early in the morning of January 3rd last week,
the forex market swung sharply to yen appreciation,
and the USD/JPY fell briefly to the 104 yen level.



At the end of last year,
the Nikkei Stock Average fell sharply,
and the USD/JPY did not drop as much as the Nikkei.
It showed resilience, but
at the beginning of the new year, it fell rapidly.


People thought, “USD/JPY will be fine.”
And yet, unintentionally
they held more long positions than needed,
and right after the New Year,

they found themselves forced to a stop-out
and were caught in losses,
or due to fear
they executed their own stop-outs
and tried to manage,
which must have happened to some of you.


Also, the Nikkei started January 4th with a sharp decline,
so there would surely be people who incurred losses here as well.





For those people,
it may have been the worst New Year’s Day, but
whether you can turn that failure into a lesson
that changes your future by 180 degrees
depends on you.



And today,
instead of thinking, “I’ll never trade again,”
and giving up,

we want to help those who take failures seriously
and are seeking a revival,
so I have written this for you.



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Is “Swings Trading” and “Stock Academy’s method” different?
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When trading, which method you use is the most important point,
but those considering joining Stock Academy
often ask,
“How is swings trading
different from Shimoyama’s Wave Riding Investment Method?”

“To be honest, I haven’t studied the swing-trading method in detail,”
I would say.
Also,

even if you say “swings trading,”


the exact trading methods vary slightly between people,
so there is no one-size-fits-all answer.











From what I’ve heard and from reading the books by the famous Lin Kitaro,
Tip: Lin Kitaro
swing trading and
wave-riding investment share some common elements.





First,

the point of “trading one symbol only.”




Wave-riding investment also trades one symbol.



Also,
as introduced at the top,
“The market isn’t simply a guess of up or down.
It’s a skill to build a position within a fixed capital and exit.”



As Lin Kitaro states,


it’s not just market prediction;
you balance and manage positions,
which is almost the same as swing trading.



Further,
swings trading involves buying and selling,
and using long and short positions, which is also common.




Also,
the way of thinking about “averaging down”
is similar.


Averaging down means
you hold a long position,
and if the market falls,
you add to your long position,
which, in general, is considered dangerous,




but in Lin Kitaro’s teachings on
swings trading,
when you hold a long and the market falls,
you think “this is bad!”

and add to the position in a planned, safe manner.


In swings trading,
to be precise,
it differs from the commonly imagined
averaging down; you buy, and if the market declines,you add more,













And most importantly,

the idea of “deciding in advance what to do at a certain price”
is the same as swing trading.

Thus,



though there are differences in detail,
swings trading and
wave-riding investment share many similarities.




Therefore,
it is understandable that some people may think,
“Stock Academy’s wave-riding method must be swing trading, right?”
and nod in agreement.



However, there is one decisive difference.



It is
how to deal with floating losses.


In swing trading,
bad positions are to be cut immediately.




If the situation worsens,
you are taught to cut losses as soon as possible.



On the other hand,
wave-riding investment does not rely on cutting losses;

instead, you perform opposite trades to offset the losses and manage them.



“Offset losses with gains.”
But

this is the biggest difference.



Which is better is not objectively answerable.
Ultimately, choosing a method that suits you is most important.





One thing I can say is that

“Even for experts, cutting losses is challenging.”

This is spiritually demanding as well as technically.


The mental anguish of deciding to realize losses is substantial,




and perhaps positions that seem disadvantageous now could yield enormous profits later.





“Won’t waiting make the floating losses disappear?”
The moment this hesitation arises, executing an appropriate cut is psychologically very difficult.




Therefore, a method that relies on cutting losses, like swing trading, is not easy even for highly skilled traders to master.







For experienced traders,
this is a very painful truth to acknowledge.



In contrast, swings trading does not rely on cutting losses;

like solving a puzzle, you move positions to eliminate floating losses,

so even beginners can achieve profits comparatively more easily.





So, in 2019,
which method will you use for trading?



You may trade with a method that relies on loss-cutting like swing trading.




However, mentally and technically,
you should be prepared to undergo substantial training.




Only those who do not shy away from years of daily training
will be able to master swing trading.




Well then,
thank you for reading until the end of today.




Keizo Shimoyama

(Reference: “Market Adages” (Doyukan))