CIS - The Most Notorious Day Trader in Japan | Full Documentary

Summary

The script narrates the rise of CIS, Japan's infamous day trader, from his childhood in the booming 1979 economy to his legendary status in the markets. Despite academic struggles and a strict upbringing, CIS's competitive spirit and pattern recognition skills, honed through video games, led him to master day trading. His journey sees him overcoming personal challenges, experiencing monumental wins and devastating losses, ultimately learning the importance of adaptability and humility in the face of market unpredictability.

Takeaways

• 🌐 Japan's economy was booming in the 1980s, with Japanese banks and companies dominating global markets.
• 👦 The story revolves around a character named CIS, a legendary day trader who grew up in Tokyo during this period.
• 🎰 CIS learned early about the concept of 'expected values' and patterns from a lottery game incident in his childhood.
• 🏫 CIS struggled academically and faced strict parenting, which led to a sense of inadequacy and a drive to excel in other areas.
• 🎮 CIS found a passion for video games and arcades, developing skills in pattern recognition and emotional control that would later translate to trading.
• 📈 CIS entered the trading world with a traditional long-term investment strategy but quickly adapted to day trading for quicker gains.
• 📊 He refined his trading strategy using moving averages and trend analysis, which led to significant early success.
• 💡 The importance of knowing when to exit a trade, inspired by his gaming experience, became a crucial part of CIS's trading philosophy.
• 🚀 CIS's account grew exponentially, turning him into a notorious figure in the Japanese day trading community.
• 📉 However, market adaptability and personal pride led to significant losses for CIS, highlighting the unpredictability of financial markets.
• 💼 Despite setbacks, CIS's determination and adaptability allowed him to recover and continue to be a successful trader.
• 🏠 Despite his wealth, CIS maintains a humble lifestyle, focusing on his family and his passion for gaming.

Q & A

In what year did Japan's stock and real estate market experience a significant boom, as mentioned in the script?

The script indicates that Japan's stock and real estate market experienced a significant boom in 1979.

What was the nickname given to the young man who later became known as CIS, and what does it mean in Japanese?

The young man was given the nickname 'CIS', which means 'death' in Japanese.

What was the first significant lesson CIS learned about games from his experience with the lottery game in kindergarten?

CIS learned about the universal law that every game has 'expected values' and 'patterns' from his experience with the lottery game.

How did CIS's strict upbringing and academic struggles impact his self-esteem during his childhood?

CIS's strict upbringing and struggles with academics led him to feel like a 'good-for-nothing kid' and contributed to his emotional instability.

What video game did CIS play at the local arcade, and how did it help him develop his skills for future trading?

CIS played fighter video games at the local arcade, which helped him develop pattern recognition and the ability to think fast and stay calm under pressure.

What was the name of the virtual game CIS became engrossed in during his college days, and how did it relate to his later trading strategies?

CIS was engrossed in 'Ultima Online', where he developed his character, forged weapons, and managed resources, which he later referred to as 'Building and Protecting Assets', akin to his trading strategies.

How did CIS's initial trading strategy of buying undervalued quality companies perform, and what changes did he make to his strategy?

CIS's initial strategy of buying undervalued quality companies and holding them long-term did not yield fast enough results, leading him to shift to day trading and scalping for daily gains.

What key technical indicators did CIS use to determine the direction of market trends in his refined trading strategy?

CIS used the 5-day moving average and the 25-day moving average as key technical indicators to determine the direction of market trends.

How did CIS's approach to managing winning and losing trades contribute to his success as a day trader?

CIS minimized the time held on losing bets and increased the time held on winning bets, which improved his earnings and contributed to his success.

What significant event in 2006 led to CIS experiencing his greatest loss ever in trading?

The investigation of the Japanese eCommerce company Live-door for accounting fraud in 2006 led to panic selling and stop losses, resulting in CIS's greatest loss of 5 million dollars.

How did CIS adapt his trading strategy after realizing the limitations of his previous approach and the impact of his growing account size?

CIS recognized the need to create a new day trading strategy that better adapted to his portfolio size and allowed for large profits with aggressive plays, while also addressing his overconfidence and pride.

Outlines

00:00

🌟 The Rise of CIS: Early Life and Trading Lessons

This paragraph introduces the setting of Japan's economic boom in the late 1970s and CIS's childhood. Growing up in Tokyo, CIS learned early life lessons about the importance of patterns and expected values from a lottery game. His competitive nature and the strict upbringing by his parents, who valued education, set the stage for his future. Despite his lack of academic success, CIS found his calling in video games, where he honed his pattern recognition skills and developed a reputation as a formidable player, earning the name 'CIS,' which symbolizes 'death' in Japanese. His journey from a struggling student to a skilled gamer laid the foundation for his future as a day trader.

05:00

💹 From Discontent to Day Trading Mastery

In this section, we follow CIS's transition from a mechanical engineer to a day trader. Feeling trapped in his mundane job and life, CIS decides to challenge the system and prove his worth through financial success. With a modest initial investment from his savings, he enters the trading world. Initially adopting a long-term investment strategy, CIS quickly pivots to day trading to achieve faster results. Despite initial setbacks due to market volatility, a chance encounter with a seasoned trader inspires him to refine his approach. Leveraging his gaming skills in pattern recognition, CIS develops a successful trading strategy based on moving averages, which propels his account to significant growth. His aggressive trading style and impressive gains earn him a notorious reputation in the Japanese trading community.

10:01

📉 The Downfall and Realization of Overconfidence

This paragraph delves into the consequences of CIS's growing pride and overconfidence in his trading abilities. As his account swells, the thrill of trading diminishes, leading him to increase trade sizes in search of the same highs. The 2006 Live-door scandal and the 2008 financial crisis hit CIS hard, causing substantial losses due to his inability to quickly exit large positions. Despite these setbacks, CIS's determination to defeat the markets only intensifies. However, his pride blinds him to the need for strategy adaptation, and he falls into the gambler's fallacy, leading to further losses and health issues. The realization that his pride and lack of strategy evolution are the root of his problems sets the stage for a necessary change.

15:02

🚀 Rediscovering the Art of Adaptation and a Historic Trade

The final paragraph describes CIS's reflection and strategic reinvention. Recognizing his overconfidence and the need to adapt, CIS crafts a new trading strategy that accounts for his large portfolio size while maintaining aggressive plays. On August 24, 2015, during a market panic dubbed 'Black Monday,' CIS seizes the opportunity to make a historic trade. Betting against the market, he short sells paper futures and then transitions to long positions, timing the market bounce perfectly. This single trade earns him a staggering $33 million in profit, demonstrating his ability to adapt and the power of strategic trading. The paragraph concludes with a glimpse into CIS's current life, showing that despite his wealth, he remains humble and dedicated to his passions, including trading and family.

Keywords

💡Day Trader

A day trader is an individual who buys and sells financial instruments within the same trading day. The goal is to profit from the fluctuations in the market prices throughout the day. In the video, CIS becomes a notorious day trader in Japan, using his skills in pattern recognition honed from gaming to make daily wins in the stock market.

💡Expected Values

Expected value is a term from probability theory that refers to the average amount one expects to win or lose per game if the game is played repeatedly. In the context of the video, CIS learns early in life that every game, including the lottery and later the stock market, has 'expected values' and 'patterns' that can be understood and exploited.

💡Pattern Recognition

Pattern recognition is the ability to identify regularities or patterns in data or sequences. It is a skill CIS develops from playing video games and later applies to his day trading, where he identifies trends and patterns in the stock market to make informed trading decisions.

💡Scalping

Scalping in trading refers to a strategy where a trader makes many trades to profit from small price movements throughout the day. CIS shifts to this strategy after realizing that buying undervalued companies and holding them long-term was not making him money fast enough.

💡5-day Moving Average

The 5-day moving average is a technical indicator that shows the average closing price of a security over the last five days. In the video, CIS uses the 5-day moving average as one of the key indications to determine the direction of a trend in the stock market.

💡25-day Moving Average

Similarly to the 5-day moving average, the 25-day moving average is another technical indicator that reflects the average closing price over the last 25 days. It is used by CIS to further refine his trading strategy and identify longer-term trends.

💡Gambler's Fallacy

The gambler's fallacy is the mistaken belief that past events can influence the outcome of future events in a random process. CIS suffers from this fallacy, as he increases his trade frequencies and sizes, believing that his previous successes will continue, despite the changing market conditions.

💡Portfolio Size

Portfolio size refers to the total value of all the investments held by an individual or institution. In the video, CIS's large portfolio size initially contributes to his success but later becomes a liability as the market adapts and his winning strategy no longer works.

💡Nikkei 225 Stock Average

The Nikkei 225 Stock Average is a stock market index for the Tokyo Stock Exchange, representing the performance of the 225 top-rated companies listed on the exchange. CIS makes a significant bet against the Nikkei, which results in a substantial profit during a market downturn.

💡Black Monday

Black Monday refers to a day in the stock market when there is a significant drop in stock prices. In the video, CIS experiences Black Monday in 2015, where he capitalizes on the market's fear and panic to make a large profit by shorting the Nikkei 225 Stock Average.

💡Pride

Pride, in the context of the video, is portrayed as both a driving force and a hindrance for CIS. It motivates him to excel and prove his parents wrong but also blinds him to the changing market conditions and the need to adapt his trading strategy.

Highlights

Japan's stock and real estate market boom in the 1980s with Japanese banks dominating the global market.

The story of a young boy in Tokyo who would later become the notorious day trader known as CIS.

CIS's early lesson in day trading through a lottery game, learning about 'expected values' and 'patterns'.

CIS's strict upbringing and his struggle with academics leading to a feeling of inadequacy.

CIS's discovery of his talent for recognizing patterns and becoming a formidable player in arcade games.

The impact of CIS's gaming skills and emotional control on his early trading success.

CIS's initial foray into the stock market with a long-term investment strategy.

The shift to day trading and scalping as CIS seeks faster financial gains.

CIS's encounter with the legendary Japanese Daytrader BNF and the development of a new trading strategy.

The use of moving averages in CIS's trading strategy to determine market trends.

CIS's account growth to 3 million dollars by the age of 25.

The challenges of maintaining humility and satisfaction as CIS's trading success grows.

CIS's notorious reputation and the cultural impact on Japanese day trading communities.

The devastating loss of 5 million dollars due to the Live-door scandal in 2006.

CIS's realization of the need to adapt and change his trading strategy in response to market shifts.

The record-breaking trade on August 24th, 2015, where CIS made a $33 million profit.

CIS's current lifestyle, maintaining humility despite his wealth, and his continued passion for gaming.

Transcripts

It's 1979 and Japan is just entering one of its all-time greatest booms

in its stock and real estate market,

with Japan absolutely dominating international markets in the 1980s.

Japan was developing unrivalled technology and workforce efficiency.

In 1988 the 8 largest banks in the world were Japanese, and Japan accounted for almost half

the global stock market.

In this climate in 1979, a clever little fellow was growing up in the streets of Tokyo.

While his true identity is still unknown, this kid would later go by the legendary name

CIS, the most notorious day trader in Japan

CIS's first lesson in day trading came in Kindergarten.

CIS loved playing games but hated losing.

He and his kindergarten friend would often go to the local snack store

to purchase snacks and play the lottery game,

however, they always walked away with a loss, and as competitive

as he was, this was upsetting CIS.

After months of repeatedly buying in and losing,

he had had enough.

One day, being the clever kid that he was,

CIS came up with a plan to beat the lottery game.

Instead of buying single lotteries,

both CIS and his friend each bought themselves an entire box,

feeling confident that this way, they will definitely win.

They started handing in the numbers at the counter.

The results were astonishing for both CIS and his friend.

Much to their surprise, both the winning numbers in each box were exactly the same.

While he did not know it at that time,

that day would mark one of the most important lessons

CIS would learn

throughout his entire life,

The lesson of the universal law

that every game has

'expected values'

and 'patterns'.

With the Japanese economy remerging after World War 2,

and growing up in a traditional middle-class Japanese household,

CIS’s parents were extremely strict.

His parents wanted CIS to have a great education,

which was a problem for CIS as he sucked at academics.

Unable to make his parents happy and succeed in academics,

CIS is forced into feeling he’s a good-for-nothing kid.

As many young kids, CIS dreaded going to school

and would spend most of his free time playing fighter games with his friends

at his local arcade in Tokyo.

Instead of facing the academic challenge

CIS was more drawn to a new challenge:

beating his friends at fighter video games.

Having a sharp eye for patterns,

CIS was a natural,

but his emotional instability made him easy to taunt

which often led to CIS throwing games because of his anger.

Determined to be the best player in the arcade,

over countless hours

CIS started to learn he needed to think fast and stay calm

in order to win.

Shortly after,

CIS started destroying all his friends and

quickly became a notorious tough player to beat

amongst the local arcade fanatics,

which lead to him coining the name

'CIS'

which in Japanese means

'death'.

However mastering the game came at a cost,

his grades had dropped even further.

Despite having built up a sense of pride from his notorious reputation at the local arcade,

CIS’s true challenge was only just beginning.

Having experienced the poverty of WW2,

His parents deemed education as the most important opportunity

for CIS to get a better future.

His mom was relentlessly tough on him

for getting failing grades

and often beat him with her belt or by throwing her sandals.

With limited finances and household abuse,

CIS grew up a skinny kid feeling hopeless.

Trapped by his surroundings.

With no passion for school and middle school coming to a close,

his parents were getting increasingly tough on him

and started to restrict him from going outside

and going to the local arcade

unless he improved his grades.

Having no choice in the matter,

CIS really had to bite through it

and just wanted to get it over with as soon as possible.

After middle school,

his parents decided he would have to study mechanical engineering

as his relatives held good positions in the manufacturing business.

Spending his college days locked in his bedroom,

he would get lost in the virtual universe of Ultima Online,

developing his character,

forging weapons,

and managing his resources.

Or as he would later call it

'Building and Protecting Assets'.

Despite his gaming obsession,

CIS with barely minimal grades,

got a degree and a job

as a mechanical engineer in the family business.

Hoping his new job would please his parents,

he was further disappointed

when he realized nothing in his relationship with his parents

had changed.

Being trapped in a 9 to 5 as a mechanical engineer,

having had no girlfriends,

and little to no money,

CIS was feeling dead inside

and lost in life.

Being the prideful and competitive kid he was,

CIS wanted to win now more than ever.

Feeling unhappy with his life,

and determined to prove his parents wrong,

CIS decided he was going to do whatever it takes

to escape the boring system.

From his failure to get the girl he liked

and his poor upbringing with his family,

he realized the one thing that makes all the heads turn,

and the only thing the system cares about

is money.

In the year 2000, At 21 years old,

CIS saved up $30,000 worth of Yen from his mechanical engineering job,

and started battling the market as a trader.

His sole obsession in life became

'How can I beat the markets?'

He entered with the classic strategy of buying undervalued quality companies

with the objective of holding them long-term.

However, he quickly realized this wasn't going to make him money fast enough,

so what trading strategy would allow him to make daily wins?

He quickly shifted to day trading

and a more active strategy of scalping,

buying and selling short gains multiple times a day

to generate a daily earning.

But his experience with the market was limited

and even though he had great pattern recognition,

macro variabilities,

and the high-risk wins,

often led to an equal amount of losses,

getting him nowhere near his goal of making a lot of money.

Despite the repeated failure,

CIS refused to give up.

After a fateful encounter with the legendary Japanese Daytrader BNF,

and determined to beat the odds,

CIS developed his new strategy centred around his gaming-honed skills,

pattern recognition.

CIS started trading emerging trends & patterns,

Using a few key indications on the daily chart,

the 5-day moving average and the 25-day moving average,

determining the direction of the trend

based on the angle of the cross.

That hit.

He was quickly growing his account

to a tune of 100k.

Regardless of the early success,

he realized his strategy still needed some fine-tuning.

Just like in his favourite online game Ultima Online,

and as any experienced gamer knows,

one of the most important lessons you can learn

is understanding when your opponent is too strong

and choosing to get out.

The stock market is no different,

as a day trader,

CIS didn't care about a company's fundamentals

or earning reports,

he knew, in essence,

he was up against people.

Using his gamer experience of knowing when to get out,

he started minimizing his time hold

of losing bets

and increasing the time hold

on winning bets

which dramatically improved his earnings

and further snowballed his early success.

His account grew to 3 million dollars worth of yen

by the age of 25.

His determination had paid off

and he beat the market,

making lots of money in the process.

Having proved his parents wrong,

and changing his environment,

his new life came with newfound confidence and a vigour flame of pride.

With each win, he felt like it restored a part of his soul,

and made him feel alive again.

But CIS would soon learn

nothing stays the same forever.

His overconfident chat style on Japanese forum 2Channel,

and his rapid growing gains on the markets,

quickly birthed him the reputation

as one of the most notorious and aggressive day traders in Japan.

His gambling habits & his wild dog reputation

started growing him a cult-like following amongst Japanese day trading communities.

The increasing attention and successful trades

fueled an even greater flame in his monstrous sense of pride.

He was unstoppable.

When he was wrong,

he lost small,

and when he was right,

he won big.

Trade after trade,

CIS was growing in skills and money.

He transformed his account from 3 Million (dollars worth of) Yen,

to 30 Million,

in 1 year.

He was a money printing machine,

an outlaw who beat the system,

and a legend.

There wasn't a single Japanese day trader

who hadn’t heard of him.

With the weight of his notorious reputation on his shoulders,

his pride started messing with his brain.

Despite having beat poverty,

The numbers in his bank account

started losing their significance.

The thrill he felt from trades winning back his freedom

was starting to fade.

And the money he so craved for as a kid,

was starting to feel like just another number

on a computer screen.

What more was he missing?

With his growing account size and decreasing satisfaction with his wins,

CIS started increasing his trading sizes

in an attempt to recreate the same highs

as the trades in his early day trading career.

However, things took a turn for the worst.

On January 17th, 2006,

news spread a young Japanese eCommerce company called Live-door

was under investigation for accounting fraud.

The news spread like wildfire across the Japanese markets,

and investors started to panic,

leading to numerous sell-offs and triggering countless stop losses.

CIS was quick to catch on but unable to save his positions

as the large account size prevented him from quickly exiting the market,

forcing him to have to wait

for his sell orders to fill.

The market was ruthless.

As the storm settled,

92% of Japanese stocks

had dropped

and CIS was down 5 Million dollars.

His greatest loss ever.

In true prideful fashion,

CIS joked and messaged his fans

“Hey I'm losing 5 Million”

referencing Son Goku in a play of words.

Despite trying to brush it off,

and still growing his account significantly on a yearly basis,

the losses didn't stop there,

and CIS would soon face his toughest battle yet.

After a gut-wrenching loss,

CIS wanted to defeat the markets more than ever.

However,

his mind was clouded,

trading was no longer about fighting to earn his freedom,

it was now about winning.

What was his strategy?

Double down on his moves.

Focused and once again determined,

his grown market experience and long-found strategy,

had him printing his money back

at record speed.

However,

the markets are unforgiving.

CIS’s pride blinded him

from learning the important lesson,

of increasing his trade frequencies and sizes.

He was suffering from a serious case

of gambler’s fallacy.

The countless hours of trading were also taking a toll on his health.

With the recent increase in trading volume,

the accompanied stress

was giving him grey hair and chronic stomach pain.

August 2007,

After two bear stern hedge funds filed for bankruptcy,

the loom and doom of the 2008 real estate bubble

started spreading.

Mass fear spread amongst investors,

causing the Lehman Brothers stock

to drop sharply in less than 24 hours.

In this single day,

CIS lost 6 Million of his wealth.

It was no longer a fluke,

the market was starting to beat him.

The market had adapted,

and his large portfolio size

now proved his winning strategy

no longer worked,

and the stress

was starting to take a toll,

on his health.

Despite the millions in his bank account,

the recent sharp losses had set him back multiple years of hard-earned gains.

"Games taught me to think fast and stay calm”

one of his legendary quotes

his cult-like following

worshipped him for,

yet lately,

he hasn't quite felt it.

His recent aggression and large portfolio

had made him slow

and blind.

He had proved his parents wrong,

got filthy rich,

and beat the system,

what else could he want?

While his humble lifestyle didn't feel the loss,

his notorious pride did,

he worried he would lose the hard-earned acknowledgement

he had fought for.

After such a painful loss, yet still having such a large fortune,

many men would have rolled over,

and just lay back,

and enjoy the rest of their lives.

But CIS is different.

After reflecting on his journey,

CIS realized

he was the problem.

The weight of his pride had left him blind and arrogant,

he hadn’t become the worst trader,

he had simply stopped changing

and improving his strategy to fit his current circumstances.

Even though his external environment had changed,

inside he was still the same clever kid

who loved playing games,

and the one thing he hated more than anything,

was losing.

In order to be the undisputed again,

he would have to create a new day trading strategy,

one that would better adapt to his portfolio size

yet still allow him to make his large profits

with aggressive plays.

Refusing to compromise on his pride

and lose his title as one of the top dogs of Japanese day traders,

CIS set out to make the largest-sized trade in his entire day-trading career.

It's august the 24th 2015,

and 9 minutes after the opening bell,

and all major stocks have started to plummet.

Fear is spreading among the trading floors

as more and more seek to withdraw their investments.

News had spread that a recession was imminent

as China’s decade of growth

had finally come to an end.

It was black Monday,

and a reversal was coming

like never seen before.

In a tiny bedroom apartment in Tokyo Japan,

there is one man

tensely staring at the red numbers

on his 7 screens.

Betting against the market was dangerous,

but it was now or never,

there was no going back.

After having been shorting the paper futures of the Nikkei 225 Stock Average

for the last two weeks,

small profits started rolling in.

Despite a 12 Million dollar profit,

it wasn’t enough,

and he decided to further double down on his positions.

Struggling to sleep that night,

news spread that the new york markets

were collapsing.

This thing,

was turning global.

By morning he was staring at double the profits,

he knew his trend trade was right on mark,

and went in for the final stage of his trade,

betting on the market bounce.

The stress

was enormous,

If his timing was off

he would once again

lose it all.

With excruciating stomach pain,

he transferred his profits from his short positions to longs,

slowly buying in with calculated amounts,

as the downward momentum

was decreasing.

The momentum shifts.

As soon as the candles started colouring green,

he was already determining his long exits.

Countless years of trading had all come down to this one moment.

It was the perfect trade.

That single day,

CIS walked away

with $33 Million dollars in profit,

and his large volume size

had moved the leading index of Japan.

One man

had moved

the Nikkei.

Nowadays,

not much has changed for CIS in terms of lifestyle.

He still enjoys playing video games

and actively engages in his same passion of gambling.

Now being a married man and having children of his own,

CIS still spends a few hours every day

moving the Nikkei.

Despite all his wealth

CIS still lives humbly.

Despite having a large property,

CIS shows no records

of spending and living a luxurious lifestyle.

Besides making sure his family is happy,

and his parents are comfortable and healthy,

CIS spends most of his money

on the one passion he loves:

playing the game.

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