Dao of Trading

Simon, as you'll know yourself, Taoism doesn't set out to teach us anything at all. But in relation to force/energy the emphasis is clearly on excess. Excess force is wasted energy. Excess anything is wasted. ....4 ounces...no more....

It's an interesting dichotomy you've got yourself into where you appear to have divorced trading (or any other activity for that matter) from the act of meditation. If I'm reading you correctly.

Although Dzogchen has been heavily Westernised (not good - not bad) it does at least bring the possibility of some form of meditational discipline into the lives of those that would not otherwise consider embarking on such a 'far out' activity (non-activity :cool: ).

Unusual thread. :cool:
 
Simon Gordon said:
The force of the market passes me by as I sit in my stock - yes the price will fluctuate but I am at peace. I am happy - tranquil.

The stillness arises from the trade.
Click to expand...

Perhaps you're confusing "stillness" and "patience". Or you're confusing states in which the information passes through you and the information passes by you. I don't view watching the data go by as meditative. Rather it's non-participation.

The problem with discussions of this sort is the language used (Marty can attest to this from his ET thread, where through him I first learned of Phillips' book) and with the probability that talking about it doesn't help much, again because of the language used. Even if one thinks he agrees with somebody, there's always the very real possibility that they're not talking about the same thing.
 
Buffett has a Buddha like quality in the way he invests.

To be patient I think you need to have a certain mental stillness.

The market information I find meditative because it is mainly immaterial to my investment - hence I am not attatched to it.

At first when I entered the market I was scared and disturbed by the noise, now with understanding and practice I am less so.

This is what I strive for.....

Just articulating here is helping me see my way.
 
Chapter 2 Cont...

"Therefore the Master
acts without doing anything
and teaches without saying anything.
Things arise and she lets them come;
things disappear and she lets them go.
She has but doesn't possess,
acts but doesn't expect.
When her work is done, she forgets it.
That is why it lasts forever."

The Master is not selfish therefore he does not act for the sake of acting and teaches without the intent to teach. He does not try to will things his way. He owns things but not the attachment to things. He does not expect so there is no hope and fear. He has neither attachment to the actor (self) nor attachment to the action therefore he forgets in his actions and his deeds afterward. Due to the unselfish spirit, the merits of his works last forever as good as it's ever been. Good in the beginning... good in the middle... good in the end.

Although the noble actions of a bodhisattva is hard to emulate due to our own habits, we should try not to set traps for ourselves by fixating on the outcome, the effect of the outcome etc. which feed our ego with hopes and fears. We should at least take a layman's approach by trying to figure out how our methodology should perform over time. By keeping longer term perspective on the performance of the edge, we can free ourselves up from fixating on the profit/loss outcome of a single trade. Without this knowledge, it's gonna be hard to beat our biological fight or flight response due to valid concern of the unknown. It is critical to backtest the method, and manage the potential drawdown by the numbers. Admittedly the ego problem is not solved but rather reduced to just-in-time management.

End of Chapter 2
 
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Simon, I think when the Taoists talk about prefering stillness... It might imply not only no action at all. They also embrace the idea of "actionless action" or "Wu Wei." Ego-less action? But I also like K.I.S.S. (Keep it Simple and Stupid)... Why make things difficult?

In Buddhism, if a conceptual fixation is not liberated by realizing its nature, it is considered energy wasted and karma to follow. Maybe there is some parallel there.

TheBramble, are you gonna take us to the Dzogchen route? :)

It was Dbphoenix who suggested that I should have my disccussions here. Patience and wasted energy are always the big topics. I have to agree that some of the more esoteric spiritual discipline might not be an easy route although it definitely cuts more directly to the real problem - the ego. I will try to stay with stuff like going thru your numbers, do the math, keeping a journal and proper perspective etc in the text but love to continue discussions in all directions.
 
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Chapter 3

"If you overesteem great men,
people become powerless.
If you overvalue possessions,
people begin to steal.

The Master leads
by emptying people's minds
and filling their cores,
by weakening their ambition
and toughening their resolve.
He helps people lose everything
they know, everything they desire,
and creates confusion
in those who think that they know.

Practice not-doing,
and everything will fall into place."

If a leader favors great men then his people will fixate upon the fact and fight for power. If a leader overvalues possessions then his people will fixate upon wealth and steal. The Master leads by emptying people's minds from wants, feeding their stomachs, strengthening their bones, and weakening their ambitions. He always lets people free themselves from intellectual concepts, desire, and agenda. Practice actionless action and nothing is un-managed... There is no expectation to manage.

This chapter is on how a sage king governs his subjects. Maybe we can apply it to our trade management? We should first examine the motivation behind a trade? Is it an "I-am-right" trade? A feel-good trade? An "I-want-my-money" trade? Or trying to "steal" from the market because we out-smarted it last time? We all know what needs to be done... focus on the few good setups regardless of profit or loss and let the probability do its thing over time. Unfortunately sometimes we fixate upon our desire to be right or some numbers in the head and put on a trade with expectation or agenda that is out-of-place. Unknowingly, we set a trap for ourselves right out the gate... building up tracks for the whole roller-coaster ride.

We are only trying to play the "house" in a casino during the very few times the market tips its hand. These opportunities got to be rare since there can be only so few winners in the market. The casinos do not win all the times... in fact their edge is so small yet they can pay for all the drinks and entertainments. We tend to forget our role (karma yoga) due to ego. Do not take upon unneccessary risks for anything else. Practice actionless action - either wait or trade without agenda.

End of Chapter 3
 
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Just a word of caution, when I said "good" setup, for me it would be something I at least understood its dynamics AND HAD BACKTESTED IT MYSELF. I backtested a few discretionary systems sold on the market that sound great in theories. Some of them break even after commissions. Some of them don't look very good at all. I am sure someone would argue that a good trader's discretion will do magic on them. To me, why the struggle?

I know there are pitfalls for backtesting but I think there is greater danger not to do it.
 
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Tom Baldwin interviewed by Jack Schwager in Market Wizard:

"Right. I bet most people are probably ahead after their first five trades. They think, 'This is great, like free money.' But then they forget the reason they made money on their early trades was because they waited a long time. They said, 'I bet this is a good spot to buy it because I've seen the market act this way a lot of times.' And they made money. But all of a sudden, they are doing a trade every day.
The next thing that happens is they lose on a few trades, and invariably don't know how to take a loss. They made money to start, and before they know it, they are even. Now they hesitate. 'Where do I get out?' The minute they hesitate, the market just keeps going. Now they are losing money and they say, 'If I sell it here, I'm going to lose $1,000.' They don't like to lose $1,000, when they're getting paid $500 a week. Now, all of a sudden, they are thinking about the money."
 
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Hi Marty

I am searching for books with a Taoist/Zen angle.

So far I have read:

Zen in the Markets by Toppel

The Way of the Warrior Trader by McCall

The Tao of Trading by Koppel

Are there any more on the market?
 
I like Larry W. Phillips' books "Zen and the Art of Poker" and "The Tao of Poker."

It's very tricky... The very want to be in some Zen state can be a trap because we accept something and reject what is not... I am sure you know what I mean.

Sometimes when I get confused, I try to recall the song of the female wisdom dakini Niguma:

"If you don't understand that whatever appears is meditation,
What can you achieve by applying an antidote?
Perceptions are not abandoned by discarding them,
But are spontaneously freed when recognized as illusory."

- Niguma

shangpadakininiguma.jpg
 
This Zen monastery in Northumberland does a weekend introductory:

http://www.throssel.org.uk/

I cannot recommend it highly enough. :LOL:

"Zen literally means meditation and zazen or seated meditation is the heart of our practice. All beings already have the same enlightened nature as the Buddha but we obscure it through believing we are separate and isolated beings. This makes us very needy and we spend our lives trying to get what we believe we lack, through acquiring possessions, power or relationships. It is as though we are trying to fill a void inside but however much we get, the void always seems to remain. From the Buddhist viewpoint this happens because we misunderstand our own nature. To practice zazen is to learn how to see beyond one's thoughts and feelings and realize this true nature. There is a deep sufficiency in all of us and we all have a great capacity to give. These virtues and all the fruits of enlightenment are already within us but they can only be manifested when we see through our mistaken perceptions. This is a matter of discovering what we already possess rather than seeking what we believe we lack. This approach is both affirming and challenging, requiring one to look intently at the reality of the present moment - excluding nothing and grasping nothing. One needs the willingness to see oneself as one is and instead of judging what one finds, develop the capacity to neither indulge nor suppress the desires and fears that would otherwise be in control. Compassion is at the heart of this process, both for oneself and for all beings."
 
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Words may be messing us up again

"To practice zazen is to learn how to see beyond one's thoughts and feelings and realize this true nature."
'To practice mindfulness is to learn how to see before one's thought and feeling and realize this true nature'

Who will look 'beyond' to learn how to see beyond one's thoughts - bcse of those words?
Who will look 'before' to learn how to see before one's thoughts - bcse of those words?
Is looking beyond a mistake?
Is looking before a mistake?
Words... cultural semantic overlays ...

Simon, et al. actually practicing Japanese sword may help us to 'wait long - strike fast', etc.
in the markets much more than any zen trading book. Speaking of books though,
have you read Exploring The Crack In The Cosmic Egg by Joseph C. Pierce. It's old,
but not dated at all...

all the best,

zdo
 
I remember at Throssel in my tool kit to clean the men's toilet was a toothbrush.

I aim for the same detail in the stock I own.
 
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Eno had taken up lodging on a temple verandah when a strong wind began to flap the temple banner, whereupon he heard two monks engaging in an argument with each other. One was saying that it was the banner that was moving, the other that it was the wind that was moving. The debate went back and forth without their being able to agree on the principle.

Eno said to them, "Might a member of the laity be permitted to call a quick end to this lofty debate? Frankly it is not the wind or the banner that is moving kind sirs, it is your minds that are moving and nothing more."
 
Passage from Zen Buddhism and Psychoanalysis:

To "become conscious of the unconscious" means to overcome repressedness and alienation from myself, and hence from the stranger. It means to wake up, to shed illusions, fictions, and lies, to see reality as it is. The man who wakes up is the liberated man, the man whose freedom cannot be restricted either by others or by himself. The process of becoming aware of that which one was not aware of constitutes the inner revolution of man. It is the true awakening which is at the root of both creative intellectual thought and intuitive immediate grasp. To lie is possible only in a state of alienation, where reality is not experienced except as thought. In the state of being open to reality which exists in being awakened, to lie is impossible because the lie would melt under the strength of experiencing fully. In the last analysis, to make the unconscious conscious means to live in truth. Reality has ceased to be alienated; I am open to it; I let it be; hence my responses to it are "true."
 
I noticed some content is missing in the translation I used so I settle with S. Becker's translation for Chapter 4... don't want to spend too much time looking...

Here is the link to S. Becker's translation:
http://www.edepot.com/tao10.html

Chapter 4. The Infinite Way (Dao)

"The Way is infinite; its use is never exhausted.
It is bottomless, like the fountainhead of all things.
It smoothes its roughness; it unties its tangles.
It softens its light; it calms its turmoil.
Deep and still, ever present.
I do not know its source.
It seems to have existed before the Lord."

Dao is all pervasive so it must be present in our mental continuum. As taught in Buddhism, if we examine our consciousness, we can't find its beginning because it is not made up of components (not created) therefore it will not end (decompose). The mind is the ground for the reality we grasp... all the concepts we fixate.

If you leave the mind alone... it is the nature of the mind to liberate itself from the conceptual entanglement like a snake unties itself when put into a knot. All the good qualities we seek are never apart from the unwanted. All the good qualities of the mind are innate and always present despite our own confusion.

The thing to do is to face up to the thing we tend to look away because we label it "bad" while the feeling is a mere projection of the mind. Resolve its nature and not to dwell on its content. Buddhists said "The nature of samsara is nirvana." We should not look for heaven outside of hell. The long story board begins with our own confusion and fixations of self and others.

All the emotional up's and down's follow the conceptual fixations. I can't say they are good or bad but I don't see them helping in my own trading.... more like energy and time wasted. I think the practical thing to do is to pay extra attention to whether the things we do or situation we are getting ourselves into might introduce more fixations in our trading. Just avoid them outright by planning things out and doing extra works to minimize our exposure. It's a work-around until we reach Enlightenment. ;)
 
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I can't very well discuss Dao or Tao ,because I know nothing of them however some terms used in this thread struck a chord.."stillness" and "patience" so I thought I would tell you about how I view these words and why .

About 30 years ago I came across Pareto's Law..most people seem to quote this as the 80/20 rule whereas I just take it more loosely to mean that the concept of inverse proportions it represents can be found in most aspects of one's life...anyway back then I started to look at this concept ,it's relevance and applicabilty to what I do and how I spend my time etc...well you could say it changed my life , because I learned how to do nothing which for me is summed up by the use of words "stillness" and "patience" ...

...you see next time you have a conversation with someone think that most of the relevant facts you wish to impart will occur quite quickly and if the point is not then grasped the likelihood is that it is not an absence of information causing that ..it is something else specific to the listener which will not be overcome with simple words..in which case learn to do nothing..just leave it alone..don't keep at it trying to prove you are 'right' etc..just leave it...

...most of your wealth will be attributable to a few key decisions so learn to do nothing if all of your particular planets are not in alignment , 'pushing' is ineffective and wasteful of your resources...likewise if you have arrived at your plan (planets in alignment) and executed , learn to do nothing , but let it play out..even if it does not work out according to your anticipation then at least the 'cost' will be 'cheaper' on your resources than had you simply not been able to resist 'pushing' it..by resources I mean time ,money and emotional resilience...

I could cite more examples ,but I think the points made..what I will say is I read a trading book not too long ago by Goslin and above all else what I liked about that book was I thought it could help people to learn how to do nothing if they had the temperament to that....if you accept the concept of inverse proportions is applicable to human endeavour then doing nothing a lot of the time is the effective/efficient thing to do (and please no arguments from anyone about buy and hold blah...if you understand what I am saying here it has nothing to do with that approach when looked at from a financial perspective)
 
Yep! The 80/20 rule is about balancing the Yin and Yang... conserving the vitality.
:p
 
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