Sunday, September 13, 2009

Wisdom from the Tao Te Ching Pt 2 of many

Market wisdom from the Tao Te Ching, Chapter 29, Translated by Derek Lin

Derek made a great presentation today in discussing the chapter copied here in part:

Those who wish to take the world and control it
I see that they can not succeed ...
One can not control it ...

Because all things:
Either lead or follow
Either blow hot or cold
Either have strength or weakness ...

Therefore the sage:
Eliminates extremes
Eliminates excess
Eliminates arrogance

Wow, that's a lot of material in just a few words!

What I am able to understand rite now is this:
- Don't try to catch the absolute bottom or top, just try to own a large chunk out of the natural run in the middle.
- Don't clutter the real story (Price and volume) with excessive indicators, or expectations (news, analysts, fundamentals, etc.)
- Don't trade by emotions, we are incapable of perfectly identify the tops or bottoms in real time.

Sure there's that obvious stuff, and so much more...

We should not allow ourselves to become angered or confused when the markets do not fulfill our expectations. The market is neither bad or good, it simply exists.
Likewise, our strongest hopes can not cause it to change into something else.

The only thing we can do is change ourselves. Our baggage, once discarded, will no longer bind us to making possibly (likely) incorrect assumptions.With baggage removal completed, we can place trades that are in synch with market direction.

My biggest piece of baggage is selling at a small loss and then missing the run my analysis indicates is eminent. What's yours?


Don't forget to read my post: Wisdom from the Tao Te Ching Pt 1 of many

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