The first step is to know what you are getting yourself into. Trading in Japan can seem like the best job in the world, but many factors need to be considered before quitting your day job and heading off on an adventure halfway across the world.
The first thing you should consider is how much time you will need to put aside for learning Japanese. If you already speak some Japanese, this could be less than a year. It can take approximately two years to become fluent enough to handle everyday conversation needs.
Learning essential words and phrases will be super helpful as all other traders around you will speak only Japanese, making communication hard without knowing any!
Learning characters might seem daunting at first, but it doesn’t take long to get the hang of.
The Japanese characters are very straightforward and can be written with speed, competence, and confidence in no time with a bit of practice. An example would be the word for yen which is ‘ いえん’ or ‘ いえん’. Easy to write!
Remember that most words end in either an ‘n’ sound or an ‘m’. If there isn’t, then chances are it’s a character not often seen in everyday life. If you come across one, then Google it to find out what it means!
It is worth keeping up on even once you have got your head around essential communication.
Knowing how Japan has adopted English words into its language will help you understand signs, menus, and other things written around Japan.
What to know?
There are various ways that each trader can set themselves apart from others, but two methods seem to be commonly used.
The first method uses technical analysis charts that break down patterns and trends in price movement, along with indicators such as moving averages and momentum.
The second method uses fundamental analysis, considering factors like company earnings reports, government policies, and industry buzz.
Trade what you know
If your domestic currency is Yen, then every time there is a new development related to Japan or its economy, do not ignore it just because it does not involve forex trading.
This information can benefit anyone who trades stocks related to Japanese companies. One significant advantage of this knowledge is that these events increase volatility and volume on specific stocks and indices (i.e., Nikkei 225), which results in better opportunities for stock traders.
Keep your emotions under check
Almost all of the top traders and investors will say that keeping your emotions under control is one of the most critical aspects of an individual’s life if they want to be successful.
Remember, you can not allow yourself to become too optimistic when a stock starts rising after you buy it because this could end up with huge losses (or smaller profits), or worse yet, set off a panic sell-off.
This is why it is better to use price action signals instead of following your emotions when trading stocks in Japan.
Make sure you trade what other people are not trading. If every trader worldwide was buying TSE:50011 and no one else was interested in purchasing that stock, it would be good to consider selling that stock and moving on to something else.
The best way to make money trading is not by buying and holding onto a stock for the long term because you think it will increase in value over time.
Instead of finding stocks that are rising now and making sure you sell them as soon as they peak (i.e., at resistance levels).
Do not use indicators or oscillators
This rule mainly applies to an intraday trader, but generally speaking, we have seen that there is no need to use indicators or oscillators when trading stocks in Japan.
Instead of looking for buy signals from RSI stochastic, candlestick patterns, etc., look for stocks that are at support levels and make sure you buy them.
Also, look for stocks that are starting to rise off a solid base (i.e., triple bottom), then sell them as they peak out.
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