Zen and The Art of Trading

"POKER RULE#17: Learn to control chaos... Chaos theory is the branch of physics that deals with situations that expand into disorder as they unfold... One characteristic of such event is that they are sensitive to initial conditions... Accordingly, the rule is: Control things at the beginning..."

Beginning of all actions are intentions. In Karma Yoga of Hinduism, self-concern and ego are put to the back-seat in order to fulfill the destined role we play. In "Wu-wei" (actionless action) of Taoism, the performance of actions is in tune with "Dao" (the Way - the natural order of unceasing flow of change) rather than self-interest. In Buddhism: "Good in the beginning. Good in the middle. Good in the end."
 
"POKER RULE#18: Don't be drawn in by sudden frequent play on the part of another player... As always, play your cards, ignore the actions of others."

Do not drawn into the market by sudden movements of the market or what other people say. Read the chart, establish the bias, and follow your plan for trading various market conditions (range-bound, trending). Know your turf. Mark your territory. Do what works over the long run.
 
Quote from martys:


Do not [be] drawn into the market by sudden movements of the market or what other people say.
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Or perhaps by seemingly reasonable but actually illogical assumptions, like "this is too high, it's gotta come down just because."
 
If there is such a thing as a secret... this is what I had been looking for. I reluctantly put this up because these writings are passed down by the sages to help all people and not just me. This is an excerpt from the chapter "The Preservation of Life" from Chuang Tzu: (translated into English by Yutang Lin)

Prince Huei's cook was cutting up a bullock. Every blow of his hand, every heave of his shoulders, every tread of his foot, every thrust of his knee, every whshh of rent flesh, every chhk of the chopper, was in perfect rhythm, --like the dance of the Mulberry Grove, like the harmonious chords of Ching Shou.

"Well done!" cried the Prince. "Yours is skill indeed!"

"Sire," replied the cook laying down his chopper, "I have always devoted myself to Tao, which is higher than mere skill. When I first began to cut up bullocks, I saw before me whole bullocks. After three years' practice, I saw no more whole animals. And now I work with my mind and not with my eye. My mind works along without the control of the senses. Falling back upon eternal principles, I glide through such great joints or cavities as there may be, according to the natural constitution of the animal. I do not even touch the convolutions of muscle and tendon, still less attempt to cut through large bones.

"A good cook changes his chopper once a year, -- because he cuts. An ordinary cook, one a month, -- because he hacks. But I have had this chopper nineteen years, and although I have cut up many thousand bullocks, its edge is as if fresh from the whetstone. For at the joints there are always interstices, and the edge of a chopper being without thickness, it remains only to insert that which is without thickness into such an interstice. Indeed there is plenty of room for the blade to move about. It is thus that I have kept my chopper for nineteen years as though fresh from the whetstone.

"Nevertheless, when I come upon a knotty part which is difficult to tackle, I am all caution. Fixing my eye on it, I stay my hand, and gently apply my blade, until with a hwah the part yields like earth crumbling to the ground. Then I take out my chopper and stand up, and look around, and pause with an air of triumph. Then wiping my chopper, I put it carefully away."

"Bravo!" cried the Prince. "From the words of this cook I have learned how to take care of my life."
 
Quote from Flashboy:

You are absolutely correct.

This has led to my demise in both trading and playing poker..

When Playing poker. Some nights things just don't go your way.. You can do everything you are supposed to correctly.. raise/fold/call..etc.. but the cards just don't come your way or some dumbass beginner is always drawing to hands he shouldn't to beat you..

The trick is recognizing when this is happening.. many times I started off like this.. nothing could go right.. then much later the cards turn as they usually do and I find myself climbing back and at breakeven give or take a few bucks..
So many times this has happened to me and I would continue playing only to give it all back..
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The trick is to play defence and preserve your chips when this happens. At non-expert levels of play, avoiding pissing away chips on substandard and marginal hands is enough to make you a winner.

Arguably, trading is similar. There are enough good trade opportunies around. Just keep your capital intact until the "sitters" come along, then make a controlled bet and rake in the chips.
 
"POKER RULE#19: Discipline your game... it is more like patience - pacing yourself (especially emotionally) for the length of the game. This is the Zen concept of retaining composure being unaffected by outside forces.
It is different than mere patience, however. It comes from a larger and longer-term view of things - one that steps back and sees things as a whole."

This concludes the chapter "Folding" of the book Zen and the Art of Poker written by Larry Philips.

I have run into the following concepts in the process of going thru the chapter. I hope these can help people to ease their trading and bring more happiness to life in general:

1) There is a parrallel between meditation and trading according to plan: we tend to create chaos by imposing our will into the processes because we want to "improve" the processes to match our preconceived expectation. Are our expectations realistic? Probably not... especially if they come right out of trading books. Let the process of either trading (according to plan) or meditation takes its natural course - stop the tampering.

2) In the text "Dao De Jing" written by Lao Tzu, the concept of Wu-wei or actionless action are explained where the performance of actions are in accord with the natural flow of changes rather than one's self-interest. Retire one's ambitions. Act non-coercivenessly. Stop fixating on one's own agenda.

3) In the text "Chuang-Tzu" or "Zhuang-Zi", Chuang-Tzu expounded upon non-coercive actions with the story of the butcher Cook Ding (The translation I put up is OK but not a precise translation of the original). Conserve one's vitality by getting in tune and acting according to what the situations naturally call for instead of one's own will or contrivance.

(2) and (3) are Taoist concepts. I can probably find similar concepts in Buddhism but they were not spelled out as clear. If I was to kept my mind fixated only to my religion (Buddhism), I would have never run into these crytalized gems of Taoist sages. If anyone found these concepts helpful to their trading, please keep the spirit of the sages alive... don't try to sell them for profits or claim them to be one's original ideas because the sages had never sold them for profits or claim them to be their original. Thanks.
 
Vicious merry-go-round...

The tao-te-ching was an afterthought, not a forethought. Your getting will be diametrically opposed to your "wanting". You want to find "it" - forget you ever read about it. The way is to be found through action, not thought. No one learns how to swim by sitting on the bank of the shore and conceptualizing about it. Herrigel didn't find it by reading Suzuki, it came to him spontaneously through years and years and years of action. You are getting ahead of yourselves...
 
Quote from Virtuoso:

Vicious merry-go-round...

The tao-te-ching was an afterthoughts, not a forethought. Your getting will be diametrically opposed to your "wanting". You want to find "it" - forget you ever read about it. The way is to be found through action, not thought. No one learns how to swim by sitting on the bank of the shore and conceptualizing about it. Herrigel didn't find it by reading Suzuki, it came to him spontaneously through years and years and years of action. You are getting ahead of yourselves...
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Thanks for your input. They could be afterthought. At the same time, this is not somewhere out there but something very practical and applicable right now:
Example for Wu-wei or actionless action, if I go into the market thinking I should make X amount today so that I can make Y amount this week... in other word going in with a preconceived objective. I think if I fixate on my "ambition", it will definitely affect my performance in a way that I will get further and further away from the market when things turned out differently. I am setting myself up for chaos when I try to impose my will onto the market. Of course, I have expectation everytime I pull the trigger but there is no need to fixate on it while making each trade. In fact, it takes the fear out of the trade if I retire my ambition. If I want to take out a point from the market but it is repeatedly meeting resistance at a 3/4 point profit, I am not going to wait for that perfect trade... I will pay that 1/4 point to lengthen my life.
Example for Non-coercive action of Cook Ding in Chuang-Tzu, his chopper never needed to be changed or sharpened for nineteen years because he never fights his way thru the situations, he moves according to the natural structure. In trading, the money in the account is trader's chopper, don't wear it out by taking trade against the natural rhythm of the market because of something in your head.
These are NOT abstract concepts to be applied after one achieves some mysterious level of mastery. I might not do a good job in applying the principles but I think it is a great way to approach trading.
In meditation, there is the beginning stage of tranquility meditation and the advanced stage of insight meditation. But in practice, one of my teachers said "Combine them both. Why not?"
In Mahamudra, the path is not different from the result and the result is not different from the ground. Forgive me if I sound like an arrogant asshole, deep down I can only say what took Herrigel so long, he was supposed to practice IT from day one according to the teaching. He was fantasizing a process.
 
Quote from martys:

Thanks for your input. They could be afterthought. At the same time, this is not somewhere out there but something very practical and applicable right now:
Example for Wu-wei or actionless action, if I go into the market thinking I should make X amount today so that I can make Y amount this week... in other word going in with a preconceived objective. I think if I fixate on my "ambition", it will definitely affect my performance in a way that I will get further and further away from the market when things turned out differently. I am setting myself up for chaos when I try to impose my will onto the market. Of course, I have expectation everytime I pull the trigger but there is no need to fixate on it while making each trade. In fact, it takes the fear out of the trade if I retire my ambition. If I want to take out a point from the market but it is repeatedly meeting resistance at a 3/4 point profit, I am not going to wait for that perfect trade... I will pay that 1/4 point to lengthen my life.
Example for Non-coercive action of Cook Ding in Chuang-Tzu, his chopper never needed to be changed or sharpened for nineteen years because he never fights his way thru the situations, he moves according to the natural structure. In trading, the money in the account is trader's chopper, don't wear it out by taking trade against the natural rhythm of the market because of something in your head.
These are NOT abstract concepts to be applied after one achieves some mysterious level of mastery. I might not do a good job in applying the principles but I think it is a great way to approach trading.
In meditation, there is the beginning stage of tranquility meditation and the advanced stage of insight meditation. But in practice, one of my teachers said "Combine them both. Why not?"
In Mahamudra, the path is not different from the result and the result is not different from the ground. Forgive me if I sound like an arrogant asshole, deep down I can only say what took Herrigel so long, he was supposed to practice IT from day one according to the teaching. He was fantasizing a process.
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There is very little that you can tell me about the teachings of the ancient east that I do not already know. I was not trying to imply that this is not the "place" you eventually want to end up, but only that you can not artificialy will this state and ironicaly the more you try to get there the harder it will be. It is much like meditation, the harder you try the less likely you will ever "feel" it. It's when you forget why you are doing it and start to do it for its own sake that it will happen.

My advice; put down the zen books, focus 110% on the process of trading, immerse yourself completely within it, take everything in with an open mind-heart-spirit and if you are lucky enough to survive you will arrive at the very same place the sages speak of.

The samurai did not get there by reading ancient scriptures, they got there by yeilding their swords for 18 hours a day.
 
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