How to Win at Japanese Stocks Changes with the ‘Time Horizon’

“I want to trade Japanese stocks, but I can’t win. I still don’t know which methods, styles, or time horizons suit me…” I think many Japanese stock beginners feel this way.

In this note article, I will look at things from the perspective of “How to fight by time frame, such as scalping, day trading, and swing trading in Japanese stocks, and which one is right for you?”

I would like to summarize the characteristics, pros and cons, fighting methods, and routines for each time horizon.

How to Win at Japanese Stocks Changes with the ‘Time Horizon’

In stock investment, I believe it is much more important to decide “which time horizon to fight in” before deciding what to buy.Deciding which time horizon to fight in is quite important.

Scalping and swing trading require completely different indicators to watch, different skills, and different approaches to stop-loss.

Nevertheless,

…there are many people who mix up their time horizons like this.

First, know which battlefield you are fighting on.
And, which battlefield is suitable for you.

I think it is better to be aware of this at an early stage.

Scalping, Day Trading, Swing Trading: Investment Style Diagnosis for You

First, let’s do a simple diagnosis.
Please choose the one closest to you from the following questions.

Q1. How much can you watch the market in a day?

A. I can stay glued to it for several hours
B. I can watch it partially, such as at the opening or during lunch break
C. I can only watch it in the morning and at night
D. It is enough if I can check it a few times a week

Q2. How much unrealized loss can you endure?

A. I hate even a few minutes
B. I can endure it if it’s within the same day
C. I can tolerate it for a few days to a few weeks
D. I’m fine even for a few months if the business performance hasn’t collapsed

Q3. What is your ideal profit margin?

A. Take 0.2–1% gains repeatedly
B. Take 1–3% gains within the same day
C. Take 3–10% gains over several days to weeks
D. Aim for 20–100% or more over several months to years

Q4. What are you good at?

A. Instant decision-making
B. Chart analysis
C. Charts + fundamentals + supply and demand
D. Corporate analysis, earnings, and theme analysis

Q5. What is the most stressful for you?

A. Carrying a position overnight
B. Holding an unrealized loss for days
C. Watching the screen all day
D. Constantly chasing small price movements

Diagnosis Guidelines

Mostly A
→ Suited for scalping

Mostly B
→ Suited for day trading

Mostly C
→ Suited for swing trading

Mostly D
→ Suited for medium-to-long-term position trading

Of course, you don’t have to stick to just one type.
However, you should at least be clear about ‘what the purpose of this current position is.’ only.

Japanese Stock Styles by Time Horizon

① Scalping

Holding time

Several seconds to several minutes

Target price range

Approx. 0.1–1%

Important factors

• Order book

• Time and Sales

• VWAP

• Trading Volume

• Execution Speed

A company’s PER or PBR is almost irrelevant.
What matters is ‘which is stronger right now, buying or selling?’.

People suited for this

• Quick decision-makers

• Able to cut losses immediately

• Able to stay glued to the market

• Good at game-like processing

People not suited for this

② Day Trading

Holding period

Several minutes to several hours

In principle, settle within the same day.

Target price range

Approx. 1-5%

Important items

Since it is slightly longer than scalping, it is important to look at the trend of the day. For example, if the Nikkei is falling but an individual stock is above VWAP, it is quite strong. Conversely, if the Nikkei is up 2% but an individual stock is in the negative, it is quite weak.

People suited for this

3. Ultra-short-term swing

Personally, I think this could be treated as a separate category.

Holding period

1 to 3 business days

Target price range

3 to 8%

The middle ground between day trading and regular swing trading.

For example,

• Rebound from a significant gap down

• Continuation on the day after earnings

• Rebound after a sharp drop

• Initial breakout

etc.

Important items

• Daily chart

• 1-hour/4-hour chart

• Price-to-Low

• RSI

• Trading volume

• News/Catalysts

• Market sentiment

4. Swing Trading

Holding period

3 days to several weeks

Target price range

5-20%

At this time horizon, not only charts, but also catalysts, supply and demand, and financial performancebecome important.

For example, combinations like the following.

Important factors

Personally, I think this is one of the time horizons where it is easiest to create an ‘information advantage’ with Japanese stocks.

⑤ Position trading

Holding period

Several weeks to about half a year

Target price range

10–50%

Aiming for an even larger trend than swing trading.

Important factors

• Weekly Chart

• Monthly Chart

• Earnings Trend

• Financial Results

• Sector

• National Policy

• Valuation

• Channel Breakout

• 52-Week High

Here, we look at ‘whether a major trend has begun’ rather than ‘whether it will reverse today’.

⑥ Medium- to Long-Term Investment

Holding Period

Six months to several years

Target Price Range

30% to several times over

At this point, the importance of short-term technicals decreases significantly.

What is important is:

• Revenue Growth

• EPS Growth

• ROE

• PER

• PBR

• Cash

• Competitive Advantage

• Global Market Share

• Dividends

• Share Buybacks

• Mid-term Management Plan

and so on.

However, it is important not to buy even a good company at too high a price as well.

Differences by Time Horizon

Mixing time horizons makes it easy to lose

There are common mistakes.

Entering as a scalper but failing to cut losses, turning it into a long-term investment

At first, you thought, ‘I’ll take a +0.5% gain,’ but it becomes -1%… -3%… -10%, and you start saying, ‘This company has future potential.’ This is quite dangerous.

The opposite also happens.

You bought it as a long-term investment, but you get scared and sell after just a -3% drop the next day. This is also mixing time horizons.

Three things to decide before buying

At the very least,

1. How many days to hold
2. What percentage to target
3. What triggers a stop-loss

decide these before you buy.

I think just doing this will make a big difference.

Finding the time horizon that suits you

Ultimately, the most important thing is not the most profitable investment method, but choosing an investment method you can replicate yourself.

Someone who is good at scalping is not necessarily good at corporate analysis.
Conversely, even if you are good at corporate analysis, it does not mean you can win by reading the order book.

The required skills are different.

is an easy way to categorize it.

Summary

In Japanese stocks, there are

separate battlefields for each.

And depending on the time horizon, the information you should look at and how you win are completely different.
Therefore, first, decide “What time horizon am I competing in?”.

And then,

I think this is quite important.

If you know your own area of expertise, the amount of unnecessary information you need to look at will decrease, and your trading will become much simpler.

Finally, as a bonus, I have included the ideal routine for each time horizon.