Zen and the Art of Trading "We has met the enemy, and it is us. " The famous quote from Walt Kelly's cartoon strip, "Pogo, " would provide as fitting a one-line summation of the art of trading as any. Time and time again, those whom I interviewed for this book and its predecessor stressed the absolutely critical role of psychological elements in trading success. When asked to explain what was important to success, the Market Wizards never talked about indicators or techniques, but rather about such things as discipline, emotional control, patience, and mental attitude toward losing. The message is clear: The key to winning in the markets is internal, not external. Zen and the Art of Trading One of the hazards of doing a book of this sort is that you can go through the arduous process of transforming a rambling 250-page raw transcript into a readable 25-page chapter only to have the interview subject with hold permission to use the material. (In order to provide an atmosphere conducive to openness on the part of those I interviewed, I felt it necessary to offer them the right of final refusal.) One of the traders I interviewed, an individual who had made several hundred million dollars in trading profits for his firm, felt that the resulting chapter, which contained a lot of copy related to intuition, dreams, Eastern philosophy, and trading anecdotes, presented an image of him that would be viewed askance by his corporate clients. I prevailed upon him, however, to allow me to use the following excerpt anonymously, as I felt it offered an unusual and insightful perspective on trading. ==== I still don't understand your trading method. How could you make these huge sums of money by just watching the screen? ==== There was no system to it. It was nothing more than, "I think the market is going up, so I'm going to buy." "It's gone up enough, so I'm going to sell." It was completely impulsive. I didn't sit down and formulate any trading plan. I don't know where the intuition comes from, and there are times when it goes away. ==== How do yon recognize when it goes away? ==== When I'm wrong three times in a row, I call time out. Then I paper trade for a while. ==== For how long do you paper trade? ==== Until I think I'm in sync with the market again. Every market has a rhythm, and our job as traders is to get in sync with that rhythm. I'm not really trading when I'm doing those trades. There's trading being done, but I* m not doing it. ==== What do you mean you're not doing it? ==== There's buying and selling going on, but it's just going through me. It's like my personality and ego are not there. I don't even get a sense of satisfaction on these trades. It's absolutely that objective. Did you ever read Zen and the Art of Archery? ==== No, I have to admit, I missed that one. ==== The essence of the idea is that you have to leam to let the arrow shoot itself. There's no ego involved. It's not, "I'm shooting the arrow, and I'm releasing it." Rather, the arrow is shot, and it's always right. The same concept applies to trading. There's no sense of self at all. There's just an awareness of what will happen. The trick is to differentiate between what you want to happen and what you know will happen. The intuition knows what will happen. In trading, just as in archery, whenever there is effort, force, straining, snuggling, or trying, it's wrong. You're out of sync; you're out of harmony with the market. The perfect trade is one that requires no effort. ==== You talk about knowing what will happen. Can you give me an example? ==== The current decline in the mark versus the yen is something that I just knew would happen. ==== Before the mark went down versus the yen, it had trended in the other direction for quite some time. How did you know when the timing was right for the trade? ==== The trigger was actually a Freudian slip. I was talking about the yen/mark rate with another trader when it was trading at 87.80. I kept on referring to the price as 77.80. The other trader finally said, "What are you talking about?" I realized that I was off by ten big figures in my price references. Obviously, there was some part of me that was looking for the rate to go down to that level. It was literally bubbling out of me. From 'New Market Wizards' By Jack D. Schwager
Although, through working day in, day out with the markets, I can really feel a lot about the directions we are going. The biggest part is still a simple method that let the runners run, and cuts the losers short. The biggest enemy is us, ignorance and not willing to accept that it is your doing and thinking that create the results. It is never, ever outside of you. And the market is outside of us all.
You can often tell a post is from a newbie or an ignorant veteran when it mentions manipulation. Or any number of other gripes. In professional sports when a player is not performing to their expected level it is likely because they are dealing with a nagging, lingering injury. They almost never mention it. "No crying in baseball" Or any other sport. Or trading. Which is what I love about trading. Me, myself and I are all that is responsible.
Very true. Modified quote from Sun Tzu's "The Art of War" If you know your preferred market and know yourself, you need not fear the result of a hundred battles. If you know yourself but not any market, for every victory gained you will also suffer a defeat. If you know neither any market nor yourself, you will succumb in every battle."
Did he happen to mention what timeframe charts he liked to trade? Did he use a different timeframe for entries? What was his average hold time, min, max?