Trading Psychology

Frankly, I think that what the Zen method of trading and the mindset along with it is not something that is Eastern or non-Western, its something that is the hidden potential within everyone. Trading as an activity is unlike anything else that one can do. With trading you begin to know who you really are, your own strengths, weaknesses, fears, breaking points and everything. Trading seems like its all about hard money and and ten guys giving each other high fives in a bar on friday nights, but its really innate. Meaning that trading puts a mirror infront of you and says, "im here, confront me for whatever I am."

From this perspective, what is commonly refered to as Zen, comes in handy to deal with not the market, or the market makers, but your own inner self. A trader is a trader's own worst enemy, or friend. It doesn't matter what 'heritage' one is from, or the beliefs or anything, the fact is that this is the hard reality even if you're not a trader.
 
Fist you need an edge. If you don't have one, you could be a zen master but would still lose money.

If you are 100% mechanical, you need discipline to stick with your system and never over-ride it. If you are discretionary, the importance of trading psychology is many magnitudes higher (IMHO).

Over the years I have evolved from 100% mechanical to 90% discretionary. Although my market analysis was good, I was not capitalising optimally on my trades.

Reading Zen in the Art of Archery made a difference. Now I try to reach a state of mind similar to a basketball player "in the zone" hitting shot after shot.

I attempt to observe the market with a state of indifference and react when necessary. My goal is to get to a level where the outcome of each trade (win or loss) has no effect whatsoever, but this will take much more practice.

Trading can be a stressful occupation, but my philosophy is that if you can eliminate the stress and trade with complete clarity, you will have a more enjoyable and profitable life.
 
The ideas expressed in Zen are valuable, and not just for traders. However, they are not Eastern nor Western. They are simply ideas. I point that out because someone may have a preconception of Eastern or Western ideology and may not give them a chance as a result.

If they help you as a trader, great. Otherwise continue your search. Eventually you will arrive at the same destination, albeit by another route :)
 
I re-listened Tony Robbins tape - in regarding the Firewalk and
the issue is this; Human mind vacilates between the two notions
"pain" and "pleasure" and we draw associations with anything
a linking to either.
Fire = pain , eating=pleasure, winning=pleasure, losing=pain.
We must learn to focus and re-associate long lost links.
Fire walk teaches to overcome fears by associating trying (and
making it) with pleasure and not trying with =pain (failure)
Only if we could more associate losing=pain and learn the
trick to avoid it. Winning will take care of itself. However I suspect
many are a bit messed up (and it's not a blame) and subconciously associate losing=pleasure. We have self sabotaging belief systems. I will post further findings.
 
The following is what I believe and I look forward to people explainng to me what I am missing.

I have read about this zen stuff and studied it and I wonder how come we do not see little zen masters dominating athletic endeavors. It seem to me the strong and well prepared are the victors. Try as I might to master my mind I can not play tennis as well as someone who is as fast a hewitt or hits his serve as well as sampras. When you play or trade in the zone it is great but most victories in sports and profits in trading are garnered in a much more workmanlike manner. (Tiger Woods and his A game.)

Try as you might to be in the moment with the market you still have to decide if this is a retracement of the old move or the start of a new one. I can accept the price changes all I want, but I have to pick a side and that does not seem to be zen like. I am either going with the flow or trying to make money. Can I really be flowing and still desiring to see the market go my direction at the same time?


John
 
You are absolutely correct that to be an athlete you need the physical requirement. However, this only garners you the ability to enter the arena. If you want to excel, you soon realize that it is not braun but the grey matter between your ears that will distinguish you from others.

In trading what matters often is not what direction you take a trade in (whether long/short) but what you do, once you have taken the trade. Another consideration is whether you will harangue yourself if/when you take several losses, or whether you will regard it as the natural consequence of the profession.

Almost anyone can read a chart and say, this looks like a good long or this is a good short here. The few who can trade well, are those that have have jettisoned poisonus modes of thinking and replaced them with new ones. Otherwise you will take a trade and feel good when you win but then get depressed, or get trigger shy when you lose.
 
"The following is what I believe and I look forward to people explainng to me what I am missing.

I have read about this zen stuff and studied it and I wonder how come we do not see little zen masters dominating athletic endeavors. It seem to me the strong and well prepared are the victors. "

There is one big problem with this statement. No physical activity at all involved in trading. Making it even more mental than anything else.
Why not Zen athletes? Because it takes between 5-10 years to see substantial results. Second, to keep practicing daily for such a long time you have to know why you are actually doing it. Otherwise, you are not going to last.
 
Okay. Has everybody read Zen in the Markets by Eddie Toppel? He's as white and western as they come!:D He meditates, visualizes, does affirmations all before the market opens. Then he does it afterwards too. That is his pregame ritual and it works for him. He also suggests Yoga, chanting, transcendental meditation, and painting. I would throw in NLP, Tai Chai, Aikido, Qigong (chinese meditation practice), autogenics or any other discipline designed to control and focus the mind. After all, RSI, stochastics and all the other indicators are just that: indicators. In my mind, a trader's edge is not some magic system but the ability to react quickly and decisively to relevant market data.

Why bother with all this east/west bullshit? It almost borders on a kind of stereotyping. All Asians know and practice Zen? All Americans are unable to accept new ideas? If the Japanese were zen master traders, they probably wouldn't be in the mess they are now. If the Americans weren't accepting of new ideas, then why is every borders bookstore chock full of self help books. I'm not saying any race is better at this than any other. And I don't think anybody should.

My suggestion is to visit a hypnotist, NLP practitioner, yogi or buddhist monk to get started. I've attended a buddhist monastery and it's an amazing experience. Very peaceful. Allows you to get into the "flow" very quickly. Go to a yoga class and speak with the teacher. Go to an Aikido class. Buy a Tai Chai tape. Whatever. It all works. It's just a matter of doing it for a reasonable amount of time everyday.
 
No athlete gets into "the zone" without an incredible amount of preparation, both physically and mentally. This level of preparedness can only be accomplished by a select few who are both genetically gifted and motivated. Getting to this point is purely a byproduct of this predisposition and preparation. I have been associated with many professional athletes and I can assure you that (Phil Jackson not withstanding) the specific concept of "Zen state of mind" is not talked about or aspired to. What the athlete is concerned with is to be focused and undistracted. This is after the preparedness has been completed. The Zen state that we are talking about can be labeled with these kinds of western words, feelings and emotions. I don't think a paradigm shifting state of mind has to be attained. The important point is to realize that this is not a shortcut or technique that can be accomplished independently. There is no shortcut to true success. It takes alot of hard work, after which we may all see glimpses of "the zone".

DJC
 
Athletics and trading have some things in common. However, I do not believe there is a genetic gift of trading. Mindset is contantly evolving and can be changed. As for how hard or easy it is, Zen masters say that by doing nothing, zen can be achieved. Zen is easy according to them. We just make it hard. I find that very reassuring for a beginning trader. It's all about beliefs and perceptions. Change your beliefs and you can get into the zone. In the end, zen is just about proper breathing and staying in the moment. It's that simple. Anybody want to share their experiences of being in the zone?
 
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