In the summer of 2015, news agencies' feeds, social networks and Forex trader blogs were flooded with messages about the mysterious Japanese trader with nickname CIS who earned $ 34 million over the day.
CIS became popular thanks to an article in Bloomberg. The correspondent met with this unusual Japanese trader who has reached high profits without using fundamental analysis techniques and technical indicators.
Bloomberg catch
Trader CIS attracted the attention of the journalists with his public reports on the accomplished profitable trades published in his twitter account with forty thousand subscribers.
For security reasons, CIS hides his location, but agreed to a meeting with the representative of the newspaper and reveal the results of brokerage reports, according to which his earnings from the exchange amounted to more than $150 million in 10 years.
The Japanese trader lives his life in twitter where he keeps a trader's diary of trades showing off his achievements on the stock exchange and results in various games.
He lives alone in a rented apartment, and his interests are limited by the financial market, video games, poker, expensive wines and rare walks.
CIS’s goes on like a game. Having become addicted to poker, CIS accidentally discovered another way to get adrenaline - the stock exchange where there are more partners and higher stakes.
The correspondent couldn’t learn anything about the strategy - the trader said some common phrases about opening trades in the crowd direction. He only gave away that he uses the attitude of world investors to the Japanese market instruments as an insurance.
The attempts to clarify CIS’s views on the impact of the negative processes in the Chinese economy on the APR economy, as well as to get forecasts for the development of medium- and long-term trends in the Japanese stock market during the conversation were unsuccessful.
CIS explained that he does not know anything at all about macroeconomics or the impact of fundamental and technical indicators, and does not follow the news.
Despite the impressive profits, his losses are no less impressive - he paid $6 million for neglecting the news, by hitting the sale on the wave of Greece's debt crisis. As it turned out later, these were not his biggest drawdowns.
Life after the interview
Two Bloomberg publications, in 2013 and 2015, did not disclose CIS’s trading secrets but brought him fame. The freeloaders have turned twitter upside down in search of access to the trader's Grail, recreated the strategy, calculated the misses and losses.
Strategy
His trading instruments of choice are Nikkei futures, which allow taking positions with a leverage of 1 to 10. The trader begins to trade in small lots, gradually averaging the position. The accumulated total amount of the position sometimes exceeds $100 million.
Trade time is several hours or days, usually CIS plays off the Japanese session, closing the positions on the first hours of the American session.
Nikkei futures are traded without the use of indicators, based on observations of the currency pair USD/JPY. Knowing that market participants appreciate the yen as a safe haven, a fall insurance, the trader uses it as a measure of market inconsistency.
Let's analyze the actions of CIS on the example of his most popular trade that was described many times on forums, social networks and periodicals.
A few days before the CIS deal, the Japanese currency fell showing an appetite for risk from investors - exit out of assets meant to insure risks.
During the August 12 session, amid the currency flat, the Nikkei index, instead of growing, unexpectedly fell by 2%. The total deviation of the currency + index was 3%. With an average daily range of price changes of 1% this deviation can be considered anomalous for a random variable according to the Gaussian distribution law.
CIS decided to sell, continued to sell the next day averaging the position when the market was against the short. During three sessions, he brought the position up to 240 million dollars - the currency remained stable and the basic entry conditions did not change.
His expectations were rewarded on August 19th when Nikkei dive-bombed, which was confirmed by the growth of the yen (the picture shows the inverted pair JPY/USD).
When the currency growth stopped and the index fell below, the trader increased the number of sales contracts, reinvesting profits.
The sales closed the next day brought him profit of 13 million yen. The opposite position – buy – brought his earnings up to 35 million.
After the Japanese stock index hit the bottom, a rebound occurred, the yen at that time continued to remain stable and CIS made a purchase amid the mismatch in the movement directions (of the yen and Nikkei) with a deviation of 3%.
Losses
After telling the whole world about CIS’s earnings in the summer of 2015, Bloomberg did not say a word that all that money was lost on the purchase.
CIS made a lot of mistakes – he did not have any emotional rest after a big profit, opened a long position at the end of August and left it for the weekend. On the last day of August, the market opened with a gap down. The trader decided to average and wait for the rebound without setting stop losses.
When CIS decided to close all positions, the loss was more than 30 million dollars. In an attempt to save the position, he made opposite hedging trades in the US S&P 500 index, but unfortunately, the US stock index usually coincident with the Nikkei movement, rose, yielding an additional loss. The attempt to hedge in the yen also did not bring success, it stayed almost flat and did not cover the losses.
After staring at the monitor for several days straight, the Japanese Trading Idol closed all positions but did not specify the exact damage. In the interview, CIS admitted that he always hides misses and losses from his twitter followers.
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