Zen and The Art of Trading

"POKER RULE #72: As you become a more experienced poker player, try turning your game over to your instinct. The most important part of the above sentence is the first part: as you become more experienced. Do this too early in your poker career and it may backfire, usually with disastrous consequences... In a sense, expertise is being able to raise these hunches to the conscious level and analyze them."

As time goes on, there are additional cues I can pick up. I can even do no wrong for a while by going with just the feel but eventually I will give it back by trading inconsistently. I think it is utmost important to choose a methodology that has been backtested in one form or another over different market conditions so that its strucutre and premises one depends upon are both logical and valid (can be trusted). Those additional cues can come into play as filters but don't chase them for their own sake. Marty Schwartz mentioned that he was like a wild man in the 70's (had some winners and let the losers eat him alive) but after marrying to Audrey, he realized he doesn't need to make all the money in the world in two weeks.
 
Quote from ocean11:

In Zen


The Trader is not bullish
the Trader is not bearish either
the trader is not even neutral

cos
the Trader is the Market


In fact, there is no art in zen trading
where comes the rules??
More...

This might be true from the perspective of "absolute truth" to realize mental freedom. But from that standpoint, you would not care even if you blew up your account - you can't be hurt because you are free from all hopes and fears. At that level you are not even trading in the conventional sense. Can we honestly do that now?

To be practical, we still need to find a launch pad from the perspective of "relative truth" while not losing sight of the absolute perfection. That means we still have to find the pot, add the water, turn on the stove and boil the water.
 
"POKER RULE #73: Get to the point where you "put someone on a hand" and proceed on that assumption, then take the penalities that accrue from being wrong and the profits that accrue from being right. In poker, to put someone on a hand means you predict specifically what hand they are playing and act according to this... Putting a player on a hand is a valuable skill, but due to the very specificness of the prediction, you can be wrong at times and it can occasionally blow up in your face..."

Extreme readings in market sentiment measured by put/call ratio and VIX indicate possible overbought/oversold conditions for establishing market bias.
 
"POKER RULE #74: Try playing on instinct. As an exercise, try tuning off your thinking mechanism from time to time and going by your instinct alone... Playing by instinct is going to be wrong at times but doing it on a regular basis will purify the process..."

This is one rule might not be applicable for me. There is a fine line between impulse and instinct. Is there a need to play on instinct? Maybe in filtering out a trade when the market doesn't act right. The best thing and the only thing to do is waiting for your setup. Why can't we wait for the proper setup? Got out too early and can't stand missing the run? Or can't stand sitting on losses? Manage your little voice and stay away from cute moves. If your setup has performance issue and cannot give you the confidence, then that is a different problem.
 
"POKER RULE #75: Play on your second set of emotions, not your first... Your hunches, your intuition, your gut feeling of where you are at in a hand, your feel for the situation. Oddly enough, most players seem to have no qualms whatever about pushing all their chips on their fist set of emotions - (anger, greed, pride, ego , stubborness, revenge, one-upmanship)..."

My hunches tell me my setup only work over the long haul.
My hunches tell me trading anything else is giving up the edge.
My intuition tells me to stick with the statistical law.
My intuition tells me trading anything else will cost my head.
My gut feeling tells me to walk the talk.
My gut feeling tells me marginal trades = financial mess.
 
"POKER RULE #76: Join the flow. A person who is outside the game - a newcomer, let's say - once he has played a few times is welcomed inside, and joins the rhythm and the flow... Once this player is welcomed into the interconnectedness of the flow, a more Zen-like rhythm is reached for all players."

Stay out of the market when there is no rhythm. Step into the rhythm and join the flow at a low risk point when the dance starts. Don't chase it if you miss a step. Stay away when things doesn't feel right. We don't have to make all the money in two weeks.
 
"POKER RULE #77: Don't brag."

Bragging does nothing but increase expectation hence hope and fear. Worse if you try to prove something to someone. There goes the emotional roller coaster.
My mentor friend told me not to be cocky after good trading or I would be more likely to take a trade that I shouldn't have.
 
You might notice that I am posting two rules a day now so I can finish the book before the New Year. As dbphoneix points out that the latter rules might not be as relevant to trading. Nevertheless doing this thread has been helpful to my own development:

1) I used to knock on every door I can and learned many many setups. I put together one setup myself which I remember once got me four profitable scalps under half an hour. What do I do with all these setups? I threw them all out the window. Each setup has different win/loss and drawdown characteristics. Mixing them under one roof will destroy consistency and hence there will be no basis for confidence. Trading without confidence is like trading with two heads which creates further chaos.

Moral: You have to... have to pick your spot. Don't try to grab everything. Or you would be splashing water like someone not knowing how to swim.

2) By focusing on a few trades, I begin to have more time to really read the market actions which helps filtering out trades even more.

3) By seeing the setup works over time and understanding the driving force behind it, I don't have the butterflies in the stomach like I used when coming in every morning. The "correct" decision is simple whether it leads to profit or not.

Like Cook Ding butchering the cows, you have to hit the right spot and conserve your vital energy.

Happy Holidays.
 
"POKER RULE #78: Don't rest on your laurels. We have no laurels. The war starts over each time. Don't be overconfident of your poker skills and expertise at any time..."

Focus on one trade at a time. If the premise of the trade deteriorate, don't stick around hoping to lucky. Yes, there is always an element of luck but don't depend on it.
 
POKER RULE#79: Don't refer to your past as somehow giving you an edge. "I just came from playing Hold'em for two years in Las Vegas" is typical of the kind of self-referenced edge you sometimes hear... Most forms of self-pride come to grief in the game of poker."

We need mental closure for both winners and losers. We might throw chips carelessly because we are ahead. Or we might press a trade to get our money back. Observe if past trades is affecting our decisions. Stop and take a break if necessary.
 
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