How to Trade Japan Chaos?

There is only one way to successfully trade current Japan chaos.

How is that?

To have had a plan in place before the chaos ever hit.

My words might be the simplest sounding comments posted, but there is not a lack of depth.

Think about it.

7 thoughts on “How to Trade Japan Chaos?

  1. Certainly agree on that – we were long the Nikkei / the $ Based CME Nikkei and the Topix and all Japanese commodities ( they were trending higher – so we were long) – then the quake hit – I was told by my brokers last Friday morning early – that I had been stopped out of teh Nikkei at 10,080 – Quite a bad fill i thought – why am I having to stop out 300 points lower than the previous nights close – when the Nikkei hit 7,700 Monday night – I had my answer !!!
    Moral of the story = have a plan/ stick to the plan and NEVER ignore stops !!!

  2. Look at a chart of EWJ (the Japan ETF) – it had a trend follower short on a 20-day breakdown before the quake…the more we have incorporated TF into our strategy, the more we realize it’s about looking at the 36 futures charts we follow continuously (from Sunday ’til Friday) and taking action (without any bias – i.e. long/short, previous experience with a gain or loss in the particular commodity that’s flashing a signal, or “I don’t like — commodity”, etc.). It works – thanks Michael!!!

  3. NEVER ignore stops – amen + make sure they’re in.

    For those of us without (so far) perfectly coded systems, & who insist upon sleep, it’s an actual “holy grail” of sorts, along with position sizing, & a non-correlated portfolio.

    Who ever knows what we’ll wake up to?

    Apologies to Mike for phrasing it opposite to his many warnings/critiques of fads & nonsense…

  4. Michael;
    On the one hand I believe your philosophy is to not pay attention to economic predictions or world news that may create market forces. On the other hand, here in this comment you are saying “To have had a plan in place before the chaos ever hit” is the way to trade the chaos in Japan. I don’t understand; instead of just reacting to a move which developes into a trend, i.e. ‘Trend Following’, you are now endorsing paying attention to the economic and news value of the Japanese situation? Granted you could be a trend follower with your finger on the button ready to react, but here you seem to be admitting that a trader should also be aware of what is causing a market move whilst previously I thought I heard you say never pay attention to the cause. Please answer, I apologize for any of our past previous years nonsense, I only desire a clarification.
    Thank you.

  5. Michael;
    In the “How to trade Japan Chaos?” title statement of your March 17th Trend Following emailed posting, you do say “There is only one way to successfully trade current Japanese chaos.” Here in this statement you are alluding to and admitting the existence of an external market force,… Japanese Chaos,… that you apparently see as affecting price action, instead of being just a trend following trader following his entry signals for trends seen on a chart or a tape reading type format.
    Tell me if I am wrong, but I thought your definition of a Trend Follower paid no attention whatsoever to economics or news and made entry decisions only on chart signals of trends so as to be distant from the emotions to be conjured up from reports of earthquakes, tsunamis, radiation and wars. It seems to me that once you mention the existence of a market moving event, in your case as you described “Japan Chaos”, a trader could not then help but scrutinize charts to see if this external force would be creating a trend that could be entered for a gain. My feeling is that the trader is then mixing external market forces with simple trend following signals on charts. In our previous discussions some years ago, I rudely (my apologies) tried to convince you that a trader following trends would want to know about news and economics, external market forces, to match them to price action that was forming a trend. This trader would have the advantage of a bias regarding when the trend would begin, and as the value of the external market force diminished, when the trend might end. Granted, maybe a true trend follower wouldn’t want the information of external market forces, maybe his entry signals would be good enough, his preference.
    I only brought this up because on the one hand I thought your belief was that a trader should not pay attention to external market forces, yet you delve into “How to trade the Japan Chaos”, an external market force. I see it as no sin to use external market forces in trend following, more likely an advantage, but wonder now how you see it and use it in this posting you present.

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