I’ve been tracking the Japanese stock market (particularly the first section of the Tokyo Stock Exchange) and learning about it for a little while now. But since I’m still new, I try to be careful about what I do.
The thing about the Japanese stock market is that it is very volatile to world economy. Comparatively, Singapore appears less affected. The reason is because the Japanese yen is one of the safest currencies in the world. Each time markets like the US economy suffer, investors seeking safe haven flock to the Japanese yen driving its value up. And a stronger yen is no good for export heavy Japan, because the strong currency makes buying the same thing more expensive for foreign countries, who will then reduce purchase quantity. Japanese companies’ revenue would then go down, and investors would rush to sell off their stocks resulting in a stock market crash.
But that it affects this many people also means there’s a lot more information available on the movements of the market. I won’t go so much into the details of investing since you can definitely find much more sound and useful information online. The reason I’m writing this, however, is to share information on how you too can start investing in stocks here in Japan and if you do know more, hopefully you can tell me more and where I’ve made mistakes.
I trade through Monex even though there are several others such as SBI Securities and Rakuten Securities that offer lower transaction fees. The main reason is because I read that Monex offers very good tools and I’m more familiar with the name. Some hardcore traders do sign up for accounts with several securities firms, use each of their tools for different purposes, and then trade on the one charging the lowest transaction fees. I dislike trouble the most, so I went with just one.
At the beginning of February, I bought 1,000 shares of ANA at a unit price of 318 yen. ANA has seen increased demand in international flights from Chinese visitors, and with the opening of new flight routes to Sydney, Shanghai, and Africa, it is reasonable to expect increase in revenue. Further, ANA has a 16% stake in the rescue plan for budget airline, Skymark, after the latter filed for bankruptcy and this is foreseen to increase ANA’s share in the domestic market.
If my forecast fails in the short term, I intended to hold out till the end of March to receive dividends at 5 yen per share and hold the share for the long run. A few weeks later, the market crashed and it fell to around 284 yen making me a loss of 34,000 yen but instead of selling it, I had wanted to buy another 1,000 shares to bring my unit price down to 301 yen per share. However, I had to have control of myself. If I decided to just use 500,000 yen as starting investment, pumping in more money will cause me to eventually lose sight and possibly go bankrupt.
That is a very important rule to trading. Set a rule and stick with it. That also means, set an entry and exit point and stick with it. For example, if you decide to exit after making a 5% return on your investment, sell it when it hits +5% even if there is the possibility of it going higher. Likewise, for losses. Knowing when to sell to cut losses is equally, if not more, important. Buying shares is easy but the most difficult thing to do in trading is selling.
So I held on to the shares and in the middle of March, I sold it off at 329.2 yen per share making me a profit of 11,200 yen (before transaction fees and taxes). For your reference, transactions fees are varied depending on which securities firm you use to trade and the amount you are trading, but earnings are taxed at about 20%.
So here’s my trading results from Feb-Mar so far.
 ANA Holdings
318.0→329.2: +11,200 yen
I’ll try to trade more often and write about it.
I’ve often wondered how much money I should put into trading, and perhaps you are wondering the same too. So, I’ll finish with the most valuable advice I’ve ever received regarding this:
Limit yourself to trading within the amount that makes you excited, not the amount that makes you nervous.