Zen and The Art of Trading

"POKER RULE#31: Don't get overconfident... Don't get overconfident, egotistical, arrogant. The reason: The Big Comeuppance (the Big Meltdown, the Sky Falling In, Your Worst Nightmare) can always be lurking around the next corner..."

Overconfidence leads to carelessness and overtrading. As Paul Tudor Jones said, "Don't be a hero. Don't have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead."
 
"POKER RULE#32: Learn how to avoid a losing streak... First, watch for any clues that you might be getting cold... One answer is: You weren't there until you were there. And then it was too late... But there is a second problem here as well: you can't structure your game around this sort of thing happening. To design your game too much for this would be poor play and would stunt your game... Look for early clues; they are sometimes the harbingers worse things to come."

Losing streak hurts most to the trader's confidence. Back off with the gas petal and try to build a string of teeny winning trades to offset it. Something is out of sync... Maybe time for vacation and introspection.
 
"POKER RULE#33: When things start going right for other players and wrong for you, back off... Looking back at the end of the night, however, at how a losing streak was put together, certain things stand out, and this is one of them: we should have caught on a little sooner. It is important that we notice these situations earlier and react accordingly."

Your win/loss and number of trades (commissions) will tell you whether you are in sync/out of sync/struggling. Stop, back off and pace yourself correctly before digging a bigger hole.
 
"POKER RULE#34: Detach yourself emotionally from the game."

"Please don't think... that I am showing off when I say that I know the secret of how not to lose but win. I really do know the secret; it is terribly silly and simple and consists of keeping one's head the whole time, whatever the state of the game, and not getting excited. That is all, and it makes losing simply impossible... But that is not the point: the point is whether, having grasped the secret, a man knows how to make use of it and is fit to do so. A man can be as wise as Solomon and have an iron character and still be carried away." - Fyodor Dostoyevsky

There is quite a bit in the book for this rule. I am not going to pick it out. You might want to refer back to the book.

I think we are running a full circle back to this rule. All these rules are great but how can I internalize them?

It can be tough to call upon the rules in the heat of battle. I tried self-hypnosis and still use it but I think it is more helpful in increasing confidence etc. I need something to generate greater awareness overall on the concious level to facilitate "good" trading. I put together a little meditation program for myself. Please send me the critque on how to make it better:

The format of the following meditation is following the traditional practice of the "four thoughts turning the mind from samsara." You can find a lucid explainations of the FORMAT in Chagdud Tulku Rinpoche's book "GATES TO BUDDHIST PRACTICE" (He passed away).

The simplified format is:

First, I pray to Buddha, and my teachers for blessing and wisdom. If you are a Christian, you can pray to Jesus. I think prayer is powerful to get my head out of the box (ordinary life). If you are not religious, you can ask your inner wisdom for guidance... Basically begging... Please help me out!!!

1) Relax yourself in meditation. Sit back straight, relax the four limbs, be aware, gaze your eyes softly and steadily forward at an imaginary point two palm length away. You can put your hands on the knee. (3-5 min)
2) Reflect on the points. I have three points I want to internalize. You pick your three points and I will pick mine. I write out my script on a piece of paper for all logics for each points. Sit quietly and read your script. Reflect everything in details. Dissect the details and go even deeper in your head. Magnify every fiber of the logics that lead to the points. Spend as much time as you want and make sure you turned everything inside out.
3) Coming to a conclusion. I end each point with a self-affirmation that I will change my behavior to accomodate the points. Go to step 4 immediately.
4) Rest in the nature. Let go of all concepts like you had a long day, took a hot shower and sit back on a sofa. As soon as you become aware that thoughts and conceptions arise back again from the "gap" (it could be as short as a second or two). Go on to reflect on the next point (repeat step 3 and 4 for each point).

Finally I allocate the last portion for introspection by asking myself (ego) if I have any concern and objection in implementing those points. Do I see the logics of each point? Ask a lot of why? Ask yourself hard questions. You might not get any answer but keep pounding out questions and give your ego a chance to speak.

Then I make the resolutions in my head that I will do my absolute best to implement the points.

At the end of any practice, one would dedicate the merits of one's good intention and meditation practice to the liberation from all suffering for all beings.
 
Quote from chinook:

martys,

Do you have a simple trading plan? Did you make sure that your rules are not conflicting each other?
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Thanks, I have a simple trading plan with rules not conflicting each other. But I had a bit of trouble before. There was one setup potentially running into another and I put some filter on one. But I am still thinking making it better and more idiot-proof.
 
Quote from martys:

Thanks, I have a simple trading plan with rules not conflicting each other. But I had a bit of trouble before. There was one setup potentially running into another and I put some filter on one. But I am still thinking making it better and more idiot-proof.
More...

It also helps writing down your trades in a log (right after you open and close positions) and checking if they were within your trading parameters.
 
Quote from chinook:

It also helps writing down your trades in a log (right after you open and close positions) and checking if they were within your trading parameters.
More...

Thanks. I am doing that and it's not pretty. Most of the problems comes from being too skittish... that was how I was taught (bad habit) in the beginning. I am more moving toward level (zone) trading somtimes.

I am well aware of my problem. It's what I call "pigeon-hole" theory. If one follows one's plan and focus on a few setups, there can only be so many opportunities provided by the market each day. Let's say a hypothetical number 10, that means 10 pigeon-holes. Now as more and more pigeons (trades) go for the holes, then more likely they will be losers and it also increase the commission at the same times. It's really double jeopardy. That is why the harder one tries up to a point, the more likely profitability suffers.
 
"POKER RULE#35: Develop a true indifference to the game. George Leonard writes in Mastery that mastery's true face is often "relaxed and serene, sometimes faintly smiling." You sometimes see this with good poker players - a kind of smiling, ironic indifference to the vicissitudes of fate and the outcome of hands."

Even though, I understand that it is a statistical run but I am certainly far from being indifference. Maybe more experienced trader can comment on this.
 
Quote from martys:

"POKER RULE#35: Develop a true indifference to the game. George Leonard writes in Mastery that mastery's true face is often "relaxed and serene, sometimes faintly smiling." You sometimes see this with good poker players - a kind of smiling, ironic indifference to the vicissitudes of fate and the outcome of hands."

Even though, I understand that it is a statistical run but I am certainly far from being indifference. Maybe more experienced trader can comment on this.
More...

Perhaps whatever appear win/loss, hope/fear are all mere reflections of one's own mind. Even though one feels the elation and pain, one should remind oneself that the trades are simply part of a long statistical run and put thing in perspective. Never be too hard on oneself, the only good quality of a losing trade, is that you can learn from it.
 
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