[Resurgence] To stop losing big again. I created my own personal “swing trading rules”

It has been about a year since I started trading stocks.

The capital I started with, 1 million yen, once dropped to about 350,000 yen.

Since then, aiming for a “resurgence,” I have been recording my trades on X and note.

In my articles so far, I have been looking back at that week’s trades, saying things like:

“I won XX yen today”

“I lost XX yen”

“This trade was good”

“This was completely my own mistake”

And after continuing this far, I finally realized something.

What I need is not to find more stocks that I can win with.

First, I need to create rules to avoid losing big.

That is what I have come to think.

My trading so far has been, above all, “large losses and small gains.”

Looking back at my trades, there is a very clear pattern.

Win a little.

↓

Have a small unrealized loss.

↓

Think, “It might come back if I wait a little longer.”

↓

The loss grows.

↓

Get scared and cut the loss.

↓

Take a small profit again.

I was repeating this.

In other words,

“Slow and steady gains, then a sudden big loss.”

In fact, even in my recent trades,

+1,000 yen

+2,000 yen
+3,000 yen
After steadily accumulating profits like this,

a single large loss would wipe out all the profits I had made until then.

That happened many times.

The trade I regret the most is “Howa Machinery”

The 5th week of my resurgence.

This week, I made a pretty big mistake.

Seeing Howa Machinery with a special buy quote at the opening, I thought,

“Isn’t this going to hit the daily limit high?”

So, I bought 200 shares with the feeling of,

“It probably won’t get filled, but I’ll place a limit order about 100 yen higher than the previous day’s close. If it executes, I’m lucky.”

However, I couldn’t watch the market until around 10:00 AM that day.

And when I finally checked…

An unrealized loss of about 60,000 yen.

After that, I didn’t know if it would go down or come back.

After hesitating, I set a stop-loss line at the very limit of what I could endure.

And it reached that point.

The result was,

-97,000 yen.

Honestly, I felt like crying.

Moreover, the stock price came back after that, and by Friday, it had recovered quite a bit.

“I should have waited”

I naturally had that feeling too.

But looking back now,

that’s not it.

The problem is not “whether it came back after that.”

In the first place,

I bought 200 shares without deciding on the risk I could tolerate.

This was the biggest problem.

The moment I think “I want to win it back,” I lose again

What’s even scarier is that

when I take a big loss,

the feeling of “I can’t end it like this” emerges.

“I want to win it back in the next trade”

“I want to recover even a little bit within today”

When I think that way, my lot size naturally gets bigger.

Trying to buy 200 shares when I would normally only buy 100.

Trying to enter a situation I wouldn’t normally enter.

And then I lose again.

I also made this the title of my 5th-week resurgence article.

The moment I thought “I want to win it back,” I lost again.

I think this is a very important phrase for me right now.

So, I will create rules not to “win,” but to “not lose big”

From here on, looking back at my trades so far,

I thought about what kind of rules I would be able to follow.

The goal is not

“to win every time.”

I don’t think that’s possible.

The goal is simpler.

Not to reduce my capital significantly with a single failure.

For that purpose, I intend to try swing trading with the following rules for a while.

My 7 rules for swing trading

① Only cash trading for a while

First, I will make cash trading the basis for swing trading.

When I do margin trading, the transaction amount inevitably becomes large.

Right now, I want to prioritize

“following my own rules”

over

“winning big.”

So, first, I will rebuild my trading with cash.

② Only target “pullbacks in an uptrend”

Until now, I would buy when I thought,

“It’s going up!”

But that makes it easy to buy at the top.

From now on, I will target

points where a stock that is rising has adjusted once.

The image is:

Rise

↓

Adjustment
↓
Stop falling
↓
Rise again
↓
Buy
Instead of buying just on the prediction that “it might go up from now,” I will target pullbacks of stocks where an uptrend has already been confirmed.
I will make this the basis.

③ Do not buy at the opening

This is a very important rule for myself.

I have been burned many times at the opening.

“It looks strong today”

“It’s a special buy quote”

“It looks like it will keep going up”

I buy thinking that, and it goes down immediately.

So, I will not buy at the opening for swing trades.

I will watch for at least the first 30 minutes to an hour.

I will go with the mindset of, “If I couldn’t buy at the opening, it wasn’t meant to be for that day.”

④ The maximum loss per trade is 5,000 yen

This is the rule I want to emphasize the most this time.

Until now, I would decide the number of shares first, like

“buy 100 shares”

“buy 200 shares.”

I will reverse this.

First, I will decide

“how much I can lose at most.”

For the time being, I will use

a maximum loss of 5,000 yen per trade

as a guideline.

For example,

Buy at 2,500 yen.

The stop-loss line is 2,450 yen.

Since it is a loss of 50 yen per share,

5,000 yen ÷ 50 yen = 100 shares.

So, 100 shares.

If the stop-loss range is 100 yen,

5,000 yen ÷ 100 yen = 50 shares.

In other words,

instead of “always 100 shares,” I will decide the number of shares based on the stop-loss range.

With this, I should be able to reduce cases like “just buy 200 shares” as I did with Howa Machinery.

⑤ Decide the stop-loss price before buying

I will also be thorough about this.

Before placing an order, I will decide these four things:

* Purchase price
* Stop-loss price
* Number of shares
* Maximum loss

If these are not decided, I will not buy that stock.

Until now, there were times when I would ‘buy first and think later’.

From now on, it will be the opposite.

Think first, then buy.

6. Profits should be judged by the chart, not by ‘selling because I’m up 5,000 yen’

I am quite quick to take small profits.

+2,000 yen.

+3,000 yen.

I end up thinking, ‘I’ve finally made a profit, so I’d better sell.’

And then, it rises even further.

I have experienced this many times as well.

Therefore, from now on, I will not take profits based solely on the profit amount.

If the uptrend continues, I will hold a little longer.

Conversely, if the chart breaks down, I will sell even if the profit is 10,000 yen.

Instead of looking at ‘how much I made,’ I will look at ‘whether the reason I bought it still remains.’

7. If you think ‘I want to win it back,’ the day is over

This might be the most important one.

If I think, ‘I lost today, so I want to win it back,’ then I will stop trading for the day.

Whether I am in profit or in loss, it doesn’t matter.

Because the moment the feeling of ‘I want to win it back’ arises, it is highly likely that I am trading based on emotion rather than my own judgment.

I also decided on ‘things not to do’

If I increase the number of rules too much, there is a possibility that I won’t be able to follow them.

Therefore, I will narrow down the things I absolutely will not do to five.

My five prohibitions:

1. Do not buy based solely on the momentum at the opening.

2. Do not buy just because it is a special buy quote.

3. Do not buy 200 shares or more on impulse.

4. Do not increase lot size to win back losses.

5. If you think ‘I want to win it back,’ stop trading.

I will follow these five.

The initial goal is not ‘profit’

This is the part that has changed the most for me this time.

Until now, I was always thinking about things like:

‘How much can I win this week?’

‘I want to win back the 100,000 yen I lost last week.’

But I feel like that will just lead me to repeat the same mistakes.

So, my goals from now on will be in this order:

1. Do not incur a loss exceeding 5,000 yen

↓

2. Do not violate the rules

↓

3. Gradually improve the ‘large losses, small gains’ pattern

↓

4. As a result, leave a profit

Making ‘doing nothing’ a success

And one more important thing.

There is no need to trade every day.

Until now, I had the feeling that ‘I have to buy something today.’

But with swing trading, I can just wait until the setup looks good.

If there is no stock I want to buy, I won’t buy.

That is fine.

In fact, it is a success in the sense that ‘I did not engage in forced trading.’

I will test these rules for the next three months.

Of course, I don’t know if these rules are the correct answer.

Once I actually try them, various things will come up, like ‘5,000 yen is too narrow a stop-loss range’ or ‘I thought it was a dip, but it just kept going down.’

I will revise them when that happens.

However, I believe that what I needed until now was not a ‘way to win more,’ but a ‘system to avoid big losses.’

As someone who started with 1 million yen and saw it shrink to about 350,000 yen, I want to avoid losing more capital in a single failure.

Finally

When I started trading stocks, I thought, ‘I want to increase my money with stocks.’

Of course, I still have that feeling now.

But now, more than that, I have the feeling that ‘I don’t want to lose any more capital due to my own emotions.’

That is why I created these rules for myself this time.

From now on, rather than ‘winning big,’ I will aim for ‘not losing big.’

And instead of ‘trading to win,’ I will aim for ‘trading that I can continue.’

I will try trading with these rules.

If I fail again, I will record that failure as it is.

Will I be able to follow these rules?

I would like to record that as part of my ‘comeback’ from here on out.

First, not by winning back the 100,000 yen, but by ensuring I never make a loss like that 100,000 yen again.