Zen and The Art of Trading
- Thread starter martys
- Start date
This is to remind myself for tomorrow (actually today) and share with the few souls who struggle like me. I don't think I can do any better than this:
In Lao Tzu's Dao De Ching, his philosophy in both life and government prefers inactivity, non-coerciveness and self-lessness. These attitudes will naturally align oneself with the path of least resistance and approach the way of nature:
1) Non-trading is what makes trading functional. Without waiting for the good trades, the profits of the good trades will be squandered by taking marginal trades and comissions. Like the space inside an empty container, it is the non-entity or nothingness that makes the entity functional.
2) Non-coercive trading. Stiffness and being tough are signs of death just like a corpse, and dry branches. Yielding, and being soft are signs of life just like a living person and a life plant. Water goes to the low places and compromises with the surroundings without ego yet it can pentrate rocks and surround mountains over time. These are evidence that softness is superior to hardness.
3) Self-less trading. Retire your ambitions and trade without agenda. Chasing some number in the head will start chaos in one's performance and one will deviate from the way of nature. Don't make yourself walking on wire. Have both feet on the ground.
This is age-old life philosophy applied to trading. I hope these will help us in life too and make us better person to others.
Good trading.
In Lao Tzu's Dao De Ching, his philosophy in both life and government prefers inactivity, non-coerciveness and self-lessness. These attitudes will naturally align oneself with the path of least resistance and approach the way of nature:
1) Non-trading is what makes trading functional. Without waiting for the good trades, the profits of the good trades will be squandered by taking marginal trades and comissions. Like the space inside an empty container, it is the non-entity or nothingness that makes the entity functional.
2) Non-coercive trading. Stiffness and being tough are signs of death just like a corpse, and dry branches. Yielding, and being soft are signs of life just like a living person and a life plant. Water goes to the low places and compromises with the surroundings without ego yet it can pentrate rocks and surround mountains over time. These are evidence that softness is superior to hardness.
3) Self-less trading. Retire your ambitions and trade without agenda. Chasing some number in the head will start chaos in one's performance and one will deviate from the way of nature. Don't make yourself walking on wire. Have both feet on the ground.
This is age-old life philosophy applied to trading. I hope these will help us in life too and make us better person to others.
Good trading.
I agree with all of this, and all of this is addressed in the book to a greater or lesser extent.
The problem with (2), however, is that a higher level of self-knowledge may be required in order to avoid self-enabling behavior: boredom trades, thinking that one sees what isn't there, thinking that one is more in tune with the market than he is, assuming a level of competence that has not yet been achieved or is not yet secure.
Therefore, it may be better to stay overlong at the "play tight" level before entertaining "softness" and "yielding".
The problem with (2), however, is that a higher level of self-knowledge may be required in order to avoid self-enabling behavior: boredom trades, thinking that one sees what isn't there, thinking that one is more in tune with the market than he is, assuming a level of competence that has not yet been achieved or is not yet secure.
Therefore, it may be better to stay overlong at the "play tight" level before entertaining "softness" and "yielding".
My weak interpretation of (2) is to detect the true rhythm of the market and don't fight it. On the very coarse level for a pullback trader, maybe to go with the larger trend and waiting for the short-term trend to exhaust. Yes, it takes some skills and conviction and being too "soft" may end up doing "stop and reverse" which leads to poor entry and emotional roller coaster - turning the small winning edge into shit.
Exactly. And that's where perception can roil the senses, particularly if one doesn't understand how his perceptions are based on his beliefs.
There are plenty of days, of course, when detecting the true rhythm of the market is far more difficult than on other days. One can beat himself up for not overcoming these difficulties, but it pays to remember than quite often the market doesn't know what its rhythm is, either.
Therefore, if one doesn't know what's going on, it's entirely possible everybody else is in the same boat. Which presents a choice between finding one's way through the smoke or waiting until the smoke clears.
There are plenty of days, of course, when detecting the true rhythm of the market is far more difficult than on other days. One can beat himself up for not overcoming these difficulties, but it pays to remember than quite often the market doesn't know what its rhythm is, either.
Therefore, if one doesn't know what's going on, it's entirely possible everybody else is in the same boat. Which presents a choice between finding one's way through the smoke or waiting until the smoke clears.
Good advice on what to do when there is no rhythm being detected on the timeframe being traded on! Never force an opinion (prediction). It is only natural for the market to move in a way to cause the most amount of pain because its momentum has to be fueled by the emotions of being wrong. The market movement has to be perversed or it can't move. It's probably better to stay out for a small guy like me when the rhythm is not clear because the market IS random when she tries to gather energy by luring opinionated participants with her dance.
"POKER RULE#63: You're never going to win at poker by calling... Good poker hands are like a powerful lever that can be used to move a large boulder, but it is left unused... The point of the scene is the need for aggression when you have a good hand - not inertia and passivity."
This is again about when to press the gas petal by putting on size. I am not experienced in this.
This is again about when to press the gas petal by putting on size. I am not experienced in this.
There are definitely great moves this past weeks as the funds stuffing/unstuffing the Turkey but some of those long whip-saw consolidations also throw me off. Usually I watch time to confirm possible trend reversal but for the past two days, it just add to the confusion. Maybe it is better to move up the time frame from the hindsight but I don't have the money or the balls for the draw-down. The few days I make good money are being lucky to hit the profit target, shut down and escape all the bullshit later the day. The only thing I can think of is to focus on the very the best setup and take profit! If I lose money let it be and wait. Don't try to fight back with funny moves.
Good trading!