Techniques for Earning 100,000 Yen per Month with Stock Swing Trading
The world of stock investment is overflowing with flashy terms like “Okuribito” (those who have made 100 million yen), but for many individual investors, the figure of “100,000 yen per month” is a realistic amount that can have a significant impact on their lives. Converted to an annual income, that is 1.2 million yen, which is more than enough as a side income for a company employee, and if this can be added to one’s main salary, it creates significant leeway in the household budget.
Swing trading is an investment method where you hold stocks for a span of several days to several weeks, aiming for profits by capturing the waves (swings) of price movements. It is an investment style that sits in the “middle,” as it does not require you to be glued to a screen all day like day trading, nor does it require you to wait for years like long-term investment. For company employees, homemakers, and those who want to engage in stock investment as a side business, it can be said to be the method that makes it easiest to balance time constraints and profit opportunities.
In this article, we will systematically explain the mindset, financial planning, perspective on stock selection, basics of technical analysis, and, most importantly, mental management required to achieve the concrete goal of 100,000 yen per month.
Understanding the basic mechanism of swing trading
To consistently accumulate profits through swing trading, you must first understand what kind of market view this method is based on. Stock prices do not always rise or fall in a straight line; they form large trends while repeating rises and falls. The essence of swing trading is to cut out and profit from these “waves” of upward and downward movement.
For example, even if a stock is in a long-term upward trend, a temporary adjustment phase (pullback) will inevitably occur in the process. Buying at this pullback and selling at a short-term rebound high is one of the basic strategies. Conversely, for a stock in a downward trend, there is also a method of short-selling at a rebound high and buying back when it falls again.
The important thing is the recognition that swing trading is a method of “efficiently taking a portion of a trend.” You do not need to try to perfectly capture profits from the ceiling to the floor, or from the floor to the ceiling. Rather, such greedy thinking is the cause that leads many beginners to failure.
Financial planning to achieve 100,000 yen per month
When aiming for a profit of 100,000 yen per month, the first thing to consider is the scale of the necessary investment capital. Generally, in swing trading, there are many cases where you aim for a profit of a few percent per trade, and while the necessary capital varies depending on the number of monthly transactions and the win rate, as a guideline, if you have an investment capital of about 3 million to 5 million yen, the goal of 100,000 yen per month comes into a realistic range.
However, this is just one guideline. Even if you have little capital, you can theoretically aim for similar profits by utilizing margin trading to apply leverage, but the risk of loss increases accordingly. Especially in the stage where you have just started investing, you should avoid taking large positions that are beyond your means.
What is important when making a financial plan is not to try to achieve the target amount of 100,000 yen per month with one big win. Rather, you should have the idea of performing about 10 to 20 trades per month and reaching the result of 100,000 yen as an accumulation of those. By setting a profit target of about 5,000 to 10,000 yen per trade and having the image of steadily accumulating that, it becomes possible to manage funds without strain.
Thinking about stock selection ― What kind of stocks should you choose?
In swing trading, stock selection is one of the most important factors that determine success or failure. First, as a basic rule, it is important to choose stocks that have moderate price movement. With stocks that have little price movement, you cannot expect large profits even if you hold them for several days to several weeks. On the other hand, stocks with price movements that are too intense are difficult for beginners to manage risk, and there is a possibility of suffering unexpected large losses.
Specifically, it is desirable to choose stocks that have a certain level of trading volume or more and have a moderate range of daily price movement (volatility). Stocks with low trading volume carry liquidity risk, where you cannot find a buyer when you try to sell, and you cannot sell at the price you expected.
Also, it is worth paying attention to the industry and thematic nature. Themes that are attracting attention in the entire market, such as semiconductor-related, artificial intelligence-related, or industries that are easily linked to specific policies, tend to have prices that move significantly whenever materials appear. It can be said that stocks belonging to such “seasonal” themes are easy to target as subjects for swing trading.
Furthermore, it is also important to grasp the schedule of earnings announcements. Holding a position across an earnings announcement carries the risk that the stock price will plummet if bad news appears even if the earnings are good, so for beginners, it is safer to avoid the earnings announcement date or to adjust positions by reducing them before the announcement.
Basics of technical analysis ― What to read from the chart
In swing trading, fundamental analysis (analysis of a company’s performance and financial situation) cannot be ignored, but in deciding the actual buying and selling timing, technical analysis, that is, chart analysis, plays a central role.
One of the most fundamental indicators is the moving average line. It connects the average stock prices over a certain period, with the 5-day, 25-day, and 75-day lines being commonly used. By observing whether the stock price is above or below the moving average line, and the relative positions of multiple moving averages, you can grasp the direction of the current trend. In particular, the ‘golden cross,’ where a short-term moving average crosses above a long-term moving average, is widely known as a buy signal, while the ‘dead cross,’ where it crosses from above to below, is known as a sell signal.
Another important indicator is the RSI (Relative Strength Index). This is an indicator that quantifies whether a stock is overbought or oversold; generally, a value of 70 or above is considered overbought, and 30 or below is considered oversold. In swing trading, a contrarian approach is often used, such as placing a buy order when the RSI drops to an oversold level, anticipating a rebound.
Trading volume is also a crucial factor for judgment. Whether or not a stock price increase is accompanied by volume is an essential perspective for measuring the reliability of that trend. A price increase without volume is often considered a ‘false breakout’ and is unlikely to last.
It is also useful to learn the basic shapes of chart patterns. For example, a pattern called a ‘symmetrical triangle,’ where the price range gradually narrows, is often considered a precursor to a significant move in either direction, and identifying the direction of the breakout can serve as a basis for entry.
Determining the Entry Timing
After selecting a stock, the timing of when to actually buy (or short sell) is a critical decision that affects your profits. A common mistake many beginners make is jumping in out of impatience to ‘not miss out’ after the stock price has already risen significantly. This is called ‘buying at the top’ and becomes a cause for holding large unrealized losses during subsequent downturns.
One ideal entry point is a ‘pullback’ within an uptrend. The timing when the stock price, while maintaining an uptrend, temporarily falls back toward the moving average line can be an entry point with relatively controlled risk.
It is also effective to target points where multiple technical indicators align. For example, a timing where multiple conditions overlap—such as a price range where the moving average line acts as a support line, the RSI is approaching an oversold level, and trading volume is increasing—can serve as material to improve the accuracy of your entry.
When entering a trade, it is important to always be in a state where you can explain the rationale for ‘why you are buying here’ in your own words. Entering based solely on a feeling of ‘it seems like it will go up’ without any basis can lead to results no different from gambling.
Deciding Rules for Profit Taking and Stop-Loss in Advance
It is no exaggeration to say that the most important thing for consistently making a profit in swing trading is to clearly decide on rules for profit taking and stop-loss in advance. A typical pattern where many investors fail is delaying profit taking in anticipation of further gains when they are in profit, only to end up giving back those gains, or conversely, clinging to baseless expectations that ‘it should return eventually’ when they are in a loss, delaying the stop-loss and further expanding the loss.
As an example of concrete rules, there is a method of setting criteria in advance, such as mechanically cutting losses if the price drops by a certain percentage (e.g., about 5 to 8 percent) from the purchase price, or conversely, taking profits when a certain gain (e.g., around 10 percent) is reached. Of course, these figures should be adjusted based on the volatility of the stock and the overall market situation, but the important thing is to adhere to the principle of ‘not making decisions based on emotion.’
Regarding stop-losses, as the saying ‘stop-loss poor’ suggests, if you repeat stop-losses within too narrow a range, commissions and small losses may accumulate and put pressure on your overall profitability. Therefore, finding an appropriate stop-loss width that matches your trading style and the price movement characteristics of the stock can be called a skill in itself.
Regarding profit taking, a method of partial settlement is also an effective technique, such as selling only half when the target price is reached instead of selling everything at once, and continuing to hold the remainder to let the profits grow.
Thinking About Position Sizing and Diversification
To stably achieve the goal of 100,000 yen per month, it is also an important concept not to concentrate your funds too much on a single stock. If you invest all your funds into one stock and that stock suddenly drops due to unexpected bad news, you could end up with a large negative balance, let alone achieving that month’s goal.
As a general guideline, it is recommended to limit the investment amount in a single stock to about 20 to 30 percent of your total investment capital and to hold positions diversified across multiple stocks. This increases the possibility that even if an unexpected loss occurs in one stock, it can be covered by profits from other stocks.
It is also important to decide in advance the amount of loss you will tolerate in a single trade. Many professional traders adopt a rule of limiting the loss in a single trade to about 1 to 2 percent of their total capital. This allows you to avoid fatal damage even if stop-losses continue in succession.
The Importance of Reading the Overall Market Sentiment
While it is easy to overlook if you focus only on the technical analysis of individual stocks, grasping the overall market sentiment (the atmosphere and direction of the market) also greatly influences the success rate of swing trading. Trends in indices such as the Nikkei Stock Average and TOPIX, as well as movements in the U.S. market, have a significant impact on the price movements of individual stocks.
In phases where the overall market is in a downward trend, even if the charts of individual stocks look good, there are many cases where you cannot achieve the expected gains. Conversely, in phases where the overall market is in an upward trend, even stocks that look somewhat inferior are likely to rise due to the tailwind of the market as a whole.
Therefore, it is desirable to make it a habit to check the overall market situation before your daily trades. Specifically, checking the movements of major stock indices, currency trends, and the announcement schedules of important economic indicators on a daily basis will lead to improving the accuracy of your swing trading.
The biggest challenge: mental management
No matter how meticulously you build your technical analysis and money management rules, if your own mentality for executing them is not stable, the rules will easily collapse. In fact, it is said that the biggest reason many investors fail is not a lack of knowledge or techniques, but an inability to control their emotions.
The fear when holding unrealized losses, the greed when unrealized gains appear, and the impatience or self-destructive feelings when losing streaks continue are all major factors that distort calm judgment. In particular, ‘revenge trading,’ where you take larger positions than usual out of a desire to ‘make it back,’ is a typical pattern that leads to fatal losses.
Although it is difficult to completely eliminate such emotional fluctuations, you can reduce decisions driven by emotion by setting clear rules in advance and developing the habit of following them mechanically. Also, keeping a record of your trades and having the habit of reflecting on why you made that trade and what the result was is very effective in establishing a trading style that is not swayed by emotions.
Failure patterns that beginners easily fall into
There are several typical examples of failure patterns that many beginner traders fall into. The first is the aforementioned ‘buying at the top.’ This is a case of jumping on stocks that are being talked about on social media or in the news and buying them after they have already risen significantly.
The second is the problem of ‘not being able to cut losses.’ This is a pattern where you continue to hold stocks with unrealized losses without any basis, thinking ‘they will return someday,’ and as a result, it develops into a large loss.
The third is ‘being too fixated on one method.’ Even if a certain method worked once, market conditions are constantly changing. The same method is not always effective, and you are required to have an attitude of flexibly adjusting your strategy according to the situation.
The fourth is ‘confusion in judgment due to information overload.’ If you refer to too many indicators and information sources, you may actually become indecisive, leading to delayed decisions or contradictory judgments. Narrowing down your own judgment criteria and acting based on simple rules will lead to stable results in the long term.
Building a continuous trading routine
In order to achieve the goal of 100,000 yen per month continuously, not just temporarily, it is essential to establish a daily routine. Specifically, it is desirable to make it a habit to check the overall market sentiment before trading hours, check the charts of stocks you hold or are monitoring, and assume your scenario for the day (at what price to enter, and where to take profits or cut losses) in advance.
Also, after trading ends, it is important to look back on the day’s trades and keep a record. By repeating the cycle of analyzing why things happened for both winning and losing trades and applying that to the next time, the accuracy of your own trading will gradually improve.
On days when the market is closed, such as weekends, setting aside time to organize the flow of the market as a whole and the trends of themes and industries you are paying attention to from a more medium- to long-term perspective is also useful for continuing high-quality swing trading.
Important points regarding risk
The content explained so far is merely a summary of the basic concepts and techniques of the swing trading method, and it does not guarantee that you will definitely earn a profit of 100,000 yen per month if you practice these. Stock investment always carries the risk of losing your principal, and there is a sufficient possibility that losses will occur depending on market conditions.
In particular, when using margin trading to leverage, you need to fully understand that while there is a possibility that profits will expand, there is also a risk that losses will expand in the same way. It is a major premise to invest within the scope of your own funds, using surplus funds that will not interfere with your daily life.
Summary
The goal of earning 100,000 yen per month with swing trading is by no means unrealistic, but it is something that can only be realized by combining multiple elements: the ability to select stocks, knowledge of technical analysis, thorough money management, and above all, the power to control your own emotions.
This is not a skill that can be acquired overnight; rather, the process of gradually improving your accuracy through the accumulation of daily trades and reflection is the path to achieving this goal. By not rushing, following your rules, and steadily building experience, you will find that this is ultimately the most reliable shortcut.