Japanese obsession with the number three
Since ancient times in Japanese culture, the number three has been considered mystical, that within it there is divine power.
There is a Japanese saying - "Sandome no shojiki" - "Three times lucky". Among other things, that's why "Sakata Constitution" i "Five Sakata Methods"have achieved their mysticism. The magic number three can also be found in Western trading techniques.
We have three types of trend (upper lower and lateral), three trend classifications (main, secondary and small), three types of triangle formation (symmetrical, ascending and descending), the fan consists of three trend lines. For some unknown reason, number three has a permanent and very important meaning in technical analysis.
Very often "Sakata Methods" are presented with the following simple trade philosophy:
In the upward and downward trend the price will continue to change further in order to stabilize the direction.
It takes more power to cause a price increase than a downward trend. This sentence is directly related to the saying that the market is falling because of its own weight.
The market that rises as a result will decline and the market that has fallen will begin to increase.
They consist of two parts. These are:
1.Samni No Den market - a subjective part;
2.Sakata's strategies - the objective part.
Market "Sanmi no den" or "Sakata Constitution"
1.Leave greed, focus on the time-price ratio by observing previous price changes (emotion control and price analysis with time interval).
2.Aim for the ceiling and buying at the bottom (buy and sell points).
3.Increase the size of the position after increasing the amount of rice on the market by 100 bags, when the market is at the top or bottom. At that time, the price of rice was stiff, while only the amount of rice on the market changed (decision - size of the item).
4.If the market forecast is incorrect, you must find the error as soon as possible. Immediately after finding an error, close your position, abstain from trading for 40 to 50 days (decision about a wrong position).
5.Close 70 to 80 percent of the profitable position, liquidate the remaining part after changing the direction, when the price reaches the ceiling or is at the very bottom (directing profitable position).
First rule
BossThe first rule tells us about getting rid of the emotions of greed and what is so important about managing time and price analysis. Isaac Newton said, "I can calculate the movement of heavenly bodies, but not the madness of men." Emotions of fear and greed rule in every market. They dominate the decisions of traders. When we react to market price changes based on our emotions - you can be sure that nothing good will come of it. Any emotions should not affect our analysis. It is not important for us whether we achieve the maximum profit, but whether it is achievable at all. Waiting with an open position in a state of greed or fear, very often ends with either a small profit or a large loss.
The right time to open / close a position and the correct price level are the keys to success.
"You should never hurry to open a position because rush is the same as a bad start. When you buy or sell, wait 3 days from the time you think you can make a profit from a given market situation. " Munehisa Homma
Many traders talk about the importance of timing, we talk about golden opportunities.
When Munehisa Homma advises you to wait three days. He says you should control your mind, your subconscious mind, which creates greed and says, "You'll regret if you miss this chance, this golden chance." Wait a moment, think and calm down, start trading.
Second rule
How to manage the buying and selling position.
Many novices make a huge mistake trying to buy only at the tops and sell at the very bottom. Here comes the basic knowledge of candlestick charts. I would like to warn traders who are starting their adventure with trading on financial markets using only Price Action.
Misinterpretation of Homm's words can lead to this. This is not about selling at the very top or buying at the very bottom. An important element here is the use of the right time to open a position.
A very common mistake is the "pursuit" of a runaway price. The moment when the price begins to move quickly, emotions prevail over our common sense. We approach such situations emotionally, and then our decisions are not supported by technical analysis, but greed prevails over us. Lack of patience and anxiety pushes us to make such bad decisions. Learn to wait patiently for the right moment. The number of transactions is not important, but their quality. In other words, do not try to get 5 - 10 pips profit, but dozens. In the following you will learn techniques that will help in opening positions during an ongoing trend.
Third rule
How to decide the size of the position you undertake to open. These are comments about managing our investment fund. The size of the position depends on the size of the account. We are talking here about the Forex market with the possibility of using large leverage. But here too, our emotional state is an important element. Opening and monitoring your position is an important element. We should increase the number of open positions at every opportunity. Each subsequent pivot point is a chance for us to open another position in the same direction. Distracting positions allows us to increase profits and offset any losses. Here, the use of fractals and an alligator can be an example. On each fractal above / below the alligator, we add a position on each fractal but only to the fourth fractal. There is a recording of the "New Dimension" system on my site.
Fourth rule
What should our behavior look like when we make a mistake? What should we do when we see that we have made a mistake? First of all, after recognizing the error, immediately close the position. Analyze our approach to trade. Why and where the error occurred and why we made the decision one way and the other. This process is extremely important. If you know where and why you made a mistake, please describe it. Keeping a diary is an important element. Most (90% of traders) do not keep any notes about transactions. Such a note will help you after some time remind you of incorrect behavior and in the future, if this happens, you will know perfectly well how not to repeat the mistake.
Homma says that if you made a mistake, close your position immediately and leave the market for the next 40 to 50 days. This advice is the quintessence of wisdom. It holds a secret and at the same time a secret in itself. Leaving the market for a certain period of time allows us to calm the mind, a different view of the market. Not only will we obtain "cleansing" and calming the mind, but also our subconscious mind will have the opportunity to integrate and achieve the perfection of your strategy, "pure" look. Once again, we hear about patience and greed control. Try to remember it all. This is an extremely important element of proper trading.
The fifth rule
Managing a profitable already open position.
“Close 70% to 80% of all positions as soon as you reach the expected profit. Wait until the move is complete and close the rest of the open positions. "
Monitoring of already open positions, analysis of the trend, direction of opening and closing candles will show us when we should close each of the previously opened positions. Again, this rule tells us to be patient and warns us to keep greed under control. Many traders close positions at very low returns. The consequences are losses or a small profit. We should be patient and brave, let our position develop according to our precise plan, which we should apply from the very beginning.
It is particularly important to consider the risk-to-profit ratio. This principle has a hidden, powerful secret that you now know!
"Consult the market about the market"
The first and second methods require the use of charts and techniques employing real trading methods. The fourth and fifth methods are the basic principles of management as you should permanently use in trading to limit losses and increase profits.
In fact, the above collection of trading tactics primarily tells us about the psychology and emotional side of the approach to everyday trading. The five principles learned are the subjective side of trading. All five principles share the same message - Call for patience and greed control.
It is a championship in itself, where the result is the correct opening and closing of the position at the right time, right time, and at the right price. All five rules are closely related. The first fundamental principle of the market is its fluidity of time and price. It tells us that they should be measured, objectively measured natural market changes, swing oscillations.
When the magnitude of these movements is known, the second rule tells us when and where we should make decisions during them. We must wait for the right moment. There is a Japanese saying, "consult the market about the market." This means that when observing the market, we should pay special attention to price changes on the chart, and not rely on the opinions of market analysts or observe global international situations or economic policy, which may or may not affect the market. The chart is a graphical form representing the market price changes. It is clean and is not contaminated by the opinions of other individual people. By observing the market, anyone can identify the path the price has taken in the past and the path the price may take in the future.
Seiki Shimizu in his book "The Japanese Chart of Charts" reveals the law of natural market price changes that are characterized by "Three Levels of Fluctuation". The market moves in three levels, goes up or down, or stays temporarily in the middle, forming a zig-zag formation. It should be noted here that we are talking about price changes at a given time interval. Because the side trend at one time interval can be a set of changes in the upper and lower prices.
Since ancient times in Japanese culture, the number three has been considered mystical, that within it there is divine power.
There is a Japanese saying - "Sandome no shojiki" - "Three times lucky". Among other things, that's why "Sakata Constitution" i "Five Sakata Methods"have achieved their mysticism. The magic number three can also be found in Western trading techniques.
We have three types of trend (upper lower and lateral), three trend classifications (main, secondary and small), three types of triangle formation (symmetrical, ascending and descending), the fan consists of three trend lines. For some unknown reason, number three has a permanent and very important meaning in technical analysis.
Very often "Sakata Methods" are presented with the following simple trade philosophy:
In the upward and downward trend the price will continue to change further in order to stabilize the direction.
It takes more power to cause a price increase than a downward trend. This sentence is directly related to the saying that the market is falling because of its own weight.
The market that rises as a result will decline and the market that has fallen will begin to increase.
They consist of two parts. These are:
1.Samni No Den market - a subjective part;
2.Sakata's strategies - the objective part.
Market "Sanmi no den" or "Sakata Constitution"
1.Leave greed, focus on the time-price ratio by observing previous price changes (emotion control and price analysis with time interval).
2.Aim for the ceiling and buying at the bottom (buy and sell points).
3.Increase the size of the position after increasing the amount of rice on the market by 100 bags, when the market is at the top or bottom. At that time, the price of rice was stiff, while only the amount of rice on the market changed (decision - size of the item).
4.If the market forecast is incorrect, you must find the error as soon as possible. Immediately after finding an error, close your position, abstain from trading for 40 to 50 days (decision about a wrong position).
5.Close 70 to 80 percent of the profitable position, liquidate the remaining part after changing the direction, when the price reaches the ceiling or is at the very bottom (directing profitable position).
First rule
BossThe first rule tells us about getting rid of the emotions of greed and what is so important about managing time and price analysis. Isaac Newton said, "I can calculate the movement of heavenly bodies, but not the madness of men." Emotions of fear and greed rule in every market. They dominate the decisions of traders. When we react to market price changes based on our emotions - you can be sure that nothing good will come of it. Any emotions should not affect our analysis. It is not important for us whether we achieve the maximum profit, but whether it is achievable at all. Waiting with an open position in a state of greed or fear, very often ends with either a small profit or a large loss.
The right time to open / close a position and the correct price level are the keys to success.
"You should never hurry to open a position because rush is the same as a bad start. When you buy or sell, wait 3 days from the time you think you can make a profit from a given market situation. " Munehisa Homma
Many traders talk about the importance of timing, we talk about golden opportunities.
When Munehisa Homma advises you to wait three days. He says you should control your mind, your subconscious mind, which creates greed and says, "You'll regret if you miss this chance, this golden chance." Wait a moment, think and calm down, start trading.
Second rule
How to manage the buying and selling position.
Many novices make a huge mistake trying to buy only at the tops and sell at the very bottom. Here comes the basic knowledge of candlestick charts. I would like to warn traders who are starting their adventure with trading on financial markets using only Price Action.
Misinterpretation of Homm's words can lead to this. This is not about selling at the very top or buying at the very bottom. An important element here is the use of the right time to open a position.
A very common mistake is the "pursuit" of a runaway price. The moment when the price begins to move quickly, emotions prevail over our common sense. We approach such situations emotionally, and then our decisions are not supported by technical analysis, but greed prevails over us. Lack of patience and anxiety pushes us to make such bad decisions. Learn to wait patiently for the right moment. The number of transactions is not important, but their quality. In other words, do not try to get 5 - 10 pips profit, but dozens. In the following you will learn techniques that will help in opening positions during an ongoing trend.
Third rule
How to decide the size of the position you undertake to open. These are comments about managing our investment fund. The size of the position depends on the size of the account. We are talking here about the Forex market with the possibility of using large leverage. But here too, our emotional state is an important element. Opening and monitoring your position is an important element. We should increase the number of open positions at every opportunity. Each subsequent pivot point is a chance for us to open another position in the same direction. Distracting positions allows us to increase profits and offset any losses. Here, the use of fractals and an alligator can be an example. On each fractal above / below the alligator, we add a position on each fractal but only to the fourth fractal. There is a recording of the "New Dimension" system on my site.
Fourth rule
What should our behavior look like when we make a mistake? What should we do when we see that we have made a mistake? First of all, after recognizing the error, immediately close the position. Analyze our approach to trade. Why and where the error occurred and why we made the decision one way and the other. This process is extremely important. If you know where and why you made a mistake, please describe it. Keeping a diary is an important element. Most (90% of traders) do not keep any notes about transactions. Such a note will help you after some time remind you of incorrect behavior and in the future, if this happens, you will know perfectly well how not to repeat the mistake.
Homma says that if you made a mistake, close your position immediately and leave the market for the next 40 to 50 days. This advice is the quintessence of wisdom. It holds a secret and at the same time a secret in itself. Leaving the market for a certain period of time allows us to calm the mind, a different view of the market. Not only will we obtain "cleansing" and calming the mind, but also our subconscious mind will have the opportunity to integrate and achieve the perfection of your strategy, "pure" look. Once again, we hear about patience and greed control. Try to remember it all. This is an extremely important element of proper trading.
The fifth rule
Managing a profitable already open position.
“Close 70% to 80% of all positions as soon as you reach the expected profit. Wait until the move is complete and close the rest of the open positions. "
Monitoring of already open positions, analysis of the trend, direction of opening and closing candles will show us when we should close each of the previously opened positions. Again, this rule tells us to be patient and warns us to keep greed under control. Many traders close positions at very low returns. The consequences are losses or a small profit. We should be patient and brave, let our position develop according to our precise plan, which we should apply from the very beginning.
It is particularly important to consider the risk-to-profit ratio. This principle has a hidden, powerful secret that you now know!
"Consult the market about the market"
The first and second methods require the use of charts and techniques employing real trading methods. The fourth and fifth methods are the basic principles of management as you should permanently use in trading to limit losses and increase profits.
In fact, the above collection of trading tactics primarily tells us about the psychology and emotional side of the approach to everyday trading. The five principles learned are the subjective side of trading. All five principles share the same message - Call for patience and greed control.
It is a championship in itself, where the result is the correct opening and closing of the position at the right time, right time, and at the right price. All five rules are closely related. The first fundamental principle of the market is its fluidity of time and price. It tells us that they should be measured, objectively measured natural market changes, swing oscillations.
When the magnitude of these movements is known, the second rule tells us when and where we should make decisions during them. We must wait for the right moment. There is a Japanese saying, "consult the market about the market." This means that when observing the market, we should pay special attention to price changes on the chart, and not rely on the opinions of market analysts or observe global international situations or economic policy, which may or may not affect the market. The chart is a graphical form representing the market price changes. It is clean and is not contaminated by the opinions of other individual people. By observing the market, anyone can identify the path the price has taken in the past and the path the price may take in the future.
Seiki Shimizu in his book "The Japanese Chart of Charts" reveals the law of natural market price changes that are characterized by "Three Levels of Fluctuation". The market moves in three levels, goes up or down, or stays temporarily in the middle, forming a zig-zag formation. It should be noted here that we are talking about price changes at a given time interval. Because the side trend at one time interval can be a set of changes in the upper and lower prices.