The way you buy those stocks might actually be a detour. The decisive point overlooked by people who work hard at trading but never see their assets grow

When you hear about tips for making money with swing trading,
many people
probably think, “It’s just going to be about improving the accuracy of chart analysis, right?”

Analysis is certainly important.
However, the reason many people get results
is not because they honed their analytical skills.

They simply continued to do the three things I will talk about this time,
calmly and consistently.

What successful people really spend their time on
is completely different from practicing how to read charts.
This time, I will narrow down the tips for making money with swing trading to three points.

If you read to the end,
what not to do in tomorrow’s trade should become clear.
The third point, in particular, is so understated that
most people skip over it.
However, that is actually where the biggest difference in your account balance a year from now will come from

Tip 1: Stop looking for stocks

People who earn consistently do not look for stocks in the first place

The first tip is to stop looking for stocks.
People who earn consistently
do not look for stocks in the first place.
Without needing to search,
the stocks they watch every night are already decided.

“Isn’t finding good stocks what trading is all about?”
you might think.
I understand that feeling well.

Running screenings every night,
looking at the percentage gainers list,
“Which stock will grow tomorrow?” and searching for it.

This is a path that almost everyone who starts trading goes through.

However, as long as you are searching this way, your capital will not grow.
In the Japanese stock market, about 4,000 companies are listed.
You do your main job from morning to night,
come home, eat with your family,
and take a bath.

Checking all 4,000 companies in the remaining time
is physically difficult if you think about it calmly.

What happens if it’s impossible?
Top percentage gainers, sudden volume spikes, trending on social media
—you start picking only from the top of the rankings.
The moment you touch those,
you become fodder for the market

Small-cap stocks are narrow alleys, large-cap stocks are main streets

The ones that appear at the top of the rankings
are mostly small-cap stocks with low market capitalization.
Small-cap stocks
can easily skyrocket in price
just because a few investors with large capital enter them.

It is not rare for a chart that was rising beautifully until yesterday
to suddenly drop vertically today.

It is easy to understand if you compare it to a road.
Small-cap stocks are narrow alleys where only one car can barely pass.
If just one truck stops,
no one can move forward.

On the other hand, large-cap stocks are like a three-lane main road in each direction.
Even if one car stops,
everyone else just zips right past.

Traffic jams are less likely,
and accidents are less likely to happen in the first place.
Which one would you rather drive on every day?

That is precisely why I recommend
limiting yourself only to large-cap stocks with a market capitalization of 500 billion yen or more.
You might think, ‘Aren’t large-cap stocks too slow-moving to make money?’
but the reality is the opposite.

Because the number of people participating in trading large-cap stocks is orders of magnitude higher,
they tend to bounce back or break through cleanly at the points everyone is watching.

In other words, chart analysis is more likely to work as expected,
making it extremely reproducible.

From 4,000 companies down to 300. The meaning of seeing the same faces every night

Limiting yourself to large-cap stocks has another major benefit besides protecting your capital.
That is that
the number of stocks you need to watch is reduced to about 300.

Going from 4,000 companies to 300 means
it becomes one-thirteenth or less.

Moreover, these 300 companies don’t change every day.
The 300 companies you look at today and the 300 you look at tomorrow
are almost the same group.

When you keep watching the same 300 companies every day,
the ‘normal state’ of the charts naturally becomes ingrained in your mind.

This is the same as the supermarket you always go to.
If it’s a store you visit every week,
you reach for items without thinking about which shelf they are on,
and you notice immediately if the price of eggs goes up even a little, thinking
‘Oh, that’s gotten expensive.’

However, in a store you’ve entered for the first time,
you have to start by searching for the egg section, and you can’t even judge whether the price is high or low.

Charts are exactly the same.
Because you know the usual movements, you become able to notice
when something is different. Let’s stop entering a new store every single night.

At first, everyone says, ‘Are there really 300 companies?’ However, once you get used to it,
you will be able to look through all of them in 15 to 20 minutes
at night.

It’s not that everyone was like that from the start;
it just happened because they kept doing it every day.

Checking once a day is enough

Even if you open the charts many times, your judgment won’t change

One more thing I want to convey is that
checking the charts once a day is enough.
Many people repeatedly open charts on their smartphones while at work,
look at them during lunch breaks, look during rest periods,
and look again on the train ride home.

However, please think about it calmly.
If you look at the charts 10 times a day,
will your trading decisions change?

They won’t.
In fact, the more you look, the more you feel like you ‘want to do something,’
which only leads to unnecessary entries.

Looking for just one or two minutes between 3:00 PM and 3:30 PM

I only look at charts during the day for
just one or two minutes between 3:00 PM and 3:30 PM, right before the market closes.
The reason for that time is that by this time of day,

the stock price for the day is almost finalized.

All that’s left is to check whether it meets the conditions
‘I will enter if it takes this shape’
that I decided on the day before,
and verify the results.

If the conditions are not met, I do nothing.
That’s it.

Days where you do nothing are not a ‘waste,’ but a ‘buying opportunity’

If you feel that ‘it’s a waste to have days where you do nothing,’ then
that is exactly where you need to change.
The more you force yourself to find entry points and repeat trades with weak foundations,
the more your capital will be quietly eroded.
There is not even a millimeter of need to compete in a market you don’t understand.

Holding cash is not running away or laziness,
but preparation to ensure you seize the next opportunity
.

First, stop looking for stocks.
Narrow it down to those with a market capitalization of 500 billion yen or more,
and look at only those 300 companies for 15 minutes every night.

By just thoroughly doing this,
unnecessary losses will disappear from your trading.
Graduate from searching for stocks starting today,
and become an investor who can wait patiently.

Second tip: Decide on your exit at the same time as your entry

Don’t press the button until you can put your exit into words

The second point is to decide on your profit-taking and stop-loss exits as a set the very moment you decide on your entry point
. Everyone does the part about deciding on an entry point.

After all, there is plenty of entry know-how floating around on social media.

However, there is
almost no one
who has decided on their exit to the point where they can verbalize it.
Under what conditions will you take profit, and where will you cut your losses?

If you cannot say these two things out loud, please absolutely do not press the entry button
.

You might have thought, ‘I can just decide that by looking at the situation after I enter.’
However, this is extremely dangerous.

This is the point I most want to convey today.
The fork in the road between those who keep winning and those who keep losing their capital for a lifetime
is exactly here.

The reason is simple:
the moment you hold a position,
you are no longer a rational human being.

If you have unrealized gains, you get greedy, thinking, ‘It might grow even more,’
and if you have unrealized losses,

you get greedy, thinking, ‘It might recover eventually.’ There is no way a decision made in such a state could be correct.

You shouldn’t get on a train without deciding which station to get off at

Entering without deciding on an exit is the same as getting on a train without deciding which station to get off at.

‘The scenery still looks good, so I’ll stay on for one more stop,’ you tell yourself, and before you know it,
you’ve reached the end of the line.

In a land you’ve never stepped foot in,
only the contents of your wallet are shrinking.
This is what is known as being stuck with a losing position.

What is truly terrifying is
having your capital tied up for months while holding unrealized losses.
During that entire time,
your money is dead money.

Even if a new, perfect opportunity comes along,
you have no choice but to pass it up because your capital is tied up.
It’s not just money;
you are also throwing away the irreplaceable asset of ‘time’.

So, how should you decide on an exit?
What I do is
not rely on intuition, but decide based on a model.

‘If it breaks this line at the closing price, I cut it,’ ‘If it reaches this point, I take profit,’
—by setting criteria like these, I ensure that anyone looking at it later can reach the same decision.

And when it hits the line I’ve decided on,
even if I feel like it might keep growing, I don’t get greedy,
and I properly take my profit.

Conversely, ‘I’ll sell when it goes up a little more’
is not a criterion.
It’s just a wish.

The more abstract trading becomes, the higher the probability of losing.
That is why, until you can explain your entry and exit in your own words and numbers,
you should not be trading in practice.

Cutting losses is not a failure, but an ‘expense’

‘It’s frustrating if the stock price goes back up after I cut my losses’—I understand that feeling
painfully well.

I myself have convinced myself that ‘this company has great technology, so it must go up’
and ended up losing most of my capital.
There were times when I would stare at the screen, praying, ‘Please go back up,’ and I couldn’t sleep at night because I couldn’t stop thinking about my stuck stocks.

What changed me was
re-framing cutting losses not as a failure, but as an expense. If you run a shop,
rent, labor costs, and utility bills
are expenses that must be paid every month.

No business owner would call that a loss and refuse to pay it.
They naturally understand that it is a necessary cost to generate revenue.
They know it as a matter of course.

However, trading lacks this concept of
expenses, so
many people mistakenly believe that cutting losses is a pure loss.

But that is not the case.
Cutting losses is a necessary and natural cost
to go after profits in the next trade.

In the first place, there is no such thing as a 100% win-rate trade in this world, and
the time to lose will always come.
If that is the case, isn’t it only natural to design how you will lose beforehand?

Decide on your target and number of shares in advance

The target should be “5% per month,” not a monetary amount

There is one more thing I want you to decide in tandem with your exit.
That is your
target.

What I recommend is not an amount like
“100,000 yen per month” or “1 million yen per month,”
but rather
accumulating a 5% profit on your assets each month.

“5% a month sounds a bit modest,”
you might think.
But this is an incredibly large figure.

In an era where even bank deposits don’t reach 1% annually,
it is 5% per month.
If this sense is off,
you will never be able to earn money no matter how much time passes.

Chasing amounts is gambling; chasing percentages is investing

Why focus on percentages
rather than amounts?
That is because as long as you think in percentages,
whether the capital you are managing is 1 million yen or 10 million yen, what you do remains exactly the same.

Conversely, the moment people start chasing money,
they inevitably push themselves too hard.
“I’m 200,000 yen short this month”—this impatience leads to entries in situations that should have been passed over,
causes people to use leverage,
and makes them shift the stop-loss lines they had already decided upon.

Chasing amounts is gambling;
chasing percentages is investing.
Please clearly distinguish between these two.

Your entry point,
and your profit-taking and stop-loss points.
If these three are decided as a set,
you will no longer need to open charts on your smartphone while at work.

Since everything you need to do is already decided,
all that is left is to wait for the market to move.

Limit a single loss to 2% of your capital.

“So, how much should I buy?” you might be wondering.
At first,
it is best to set a rule that a single loss should be limited to 2% of your capital.

If you have 1 million yen, that is 20,000 yen.
Please adjust the number of shares so that it stays within this 20,000 yen.

Tip 3: Leave a 3-line note after each trade

The most understated, yet most effective method for making a difference after one year

The third tip is the most understated one.
However, it is also the method that will make the biggest difference in a year.
All you have to do is leave a 3-line note after you finish a trade.
That is all.

“Huh, that’s it?” you might be thinking.
However, there was one thing that everyone who has traded dozens or hundreds of times but has not increased their capital at all had in common.

That is, they cannot put even one of their losing patterns into words.
“It’s just a feeling,” or
“I’m mentally weak,” are the only answers they can come up with.

This is the same as trying to save money without keeping a household budget.
If you try to
“save hard this month” based only on willpower without knowing how much you spent on what,
your money will end up disappearing in the same way next month and the month after that.

Trading is the same;
if you do not grasp where you are losing,
you will continue to lose in the same way in the same place next month and the month after that.

What to write in the 3 lines

I will explain in order what exactly you should write in those 3 lines.

The first line is why you entered the trade there.
What was the moving average doing, and what did the candlestick do that made you enter?

If you find yourself hesitating when trying to write this,
it means your entry had no basis.
Consider it a major gain just to realize that.

The second line is why you exited the trade there.
Did you cut it because it reached your predetermined line,
or did you run away early because you got scared?
Please be honest here.
There is no point in trying to look good, because
you are the one who will suffer the loss.

The third line is whether you followed your rules.
Write this as a binary choice of “Yes” or “No.”
This is the most important part.

Not whether you won or lost, but whether you followed the rules

I don’t want you to misunderstand, but
the standard for judgment is not whether you won or lost.
It is whether you were able to follow your rules.

A trade where you followed the rules and lost
is actually a good trade.
Because you just paid an expected expense.

Conversely, the worst thing is a trade where you broke the rules but won.
This is because your brain will learn that
“I can win even if I break the rules.”

This small success experience will,
in half a year or a year,
wipe out your funds all at once.

That is why, the more successful a trade is,
the more it is questioned whether you were able to write ‘NO’ properly.
“When you win, please consider the next trade calmly.”
This is the reason why I keep saying that.

Combining notes with past chart verification

Practicing with past charts is the same as past exam questions

This 3-line note shows its true power when
combined with past chart verification.
It means you should practice with past charts before putting it into practice.

This is the same as past exam questions for entrance exams.
There is almost no one who would take the actual exam after just reading the reference book from beginning to end.

Solving years of past questions,
marking where you made mistakes,
and solving them again.
Your score improves through this repetition.

In that respect, if you practice with past charts,
you won’t lose a single yen no matter how many times you make a mistake.
You can try years’ worth of data in one night.

It is about repeating fictional trades using past charts,
and verifying them while recording the reasons for entry and decisions for profit-taking or stop-loss
in a notebook.
By internalizing market patterns through many verifications,
you can hone the skill to trade calmly without being swayed by emotions.

When you accumulate notes on losses, your body will start to react

“I entered with this shape and lost”—what do you think happens when you accumulate dozens or hundreds of notes like this?
The moment the same shape appears in the actual market,
before you can think with your head,
your body will react by saying
“This is one to pass on.” This is the state where
a pattern has been installed within you.

Those who practiced this carefully have stabilized their win rates faster.
Conversely, those who skipped practice are taking a detour.
Investors who keep winning
are not using any special magic.

They have just eliminated their losing patterns one by one,
that is all.

Notes only take a minute. The important thing is to leave them behind

A 3-line note takes less than a minute if you use a note app on your smartphone.
A notebook or the back of a piece of paper is fine too.
Just leave it in a form that you can look back on later.
That is all.

You who have read this far
must be serious about changing your trading.
That is why I can assert that
these humble 3 lines
will determine the balance of your brokerage account a year from now.

Starting from today’s trade,
let’s graduate from leaving things as they are.

Up to this point, I have talked about the 3 practice rules
that only people who are consistently winning
in swing trading follow. 3 practice rules.

Up until now, many of you have likely been searching for more efficient methods and
have been swayed by all sorts of information.
But as I discussed this time,
what is important is not flashy techniques.

Write down not just the conditions but also your emotions at the time,
look at the exact same chart again two or three months later,
and check your answers against your past self.
That is all you need to do.

Investing is not something to brag about to others.
It should be a means to make your life and your family’s life
freer and more prosperous.

The longer you wait to get started,
the further away opportunities will drift.
I would be happy if this article serves as a catalyst
to change your investment life, even just a little.

However, even if you understand that it is important to narrow down stocks, decide on entry and exit points, and keep a record of your trades,

you may still be unsure about what kind of charts to look at and where you should actually buy.

From here on,
I explain in detail the points you absolutely must grasp when looking at charts,
as well as how to use moving averages to judge the timing of your buys and sells.

Instead of relying only on intuition,
learn what parts of the chart you should look at to make decisions.
Please continue reading.
Your trading precision will surely improve!