Today i was watching a TV show on this well known Chinese Military strategist named Sun Tzu who dates back hundreds of years ago and i could not but help notice the incredible similarities between trading and WAR. So here’s a very unique post that you are only likely to see here at the ART OF TRADING. Please enjoy as it took me a few hours to put this together for you.
Who is Sun Tzu?
Sun Wu better known as Sun Tzu was an ancient Chinese military general, strategist and philosopher who is traditionally believed to have authored The Art of War, an influential ancient Chinese book on military strategy. Sun Tzu has had a significant impact on Chinese and Asian history and culture, both as an author of The Art of War and through legend. During the 19th and 20th centuries, Sun Tzu’s The Art of War grew in popularity and saw practical use in Western society, and his work has continued to influence both Asian and Western culture and politics.
Historians have questioned whether or not Sun Tzu was an authentic historical figure. Traditional accounts place him in the Spring and Autumn Period of China (722–481 BC) as a military general serving under King Helü of Wu, who lived c. 544—496 BC. Scholars accepting his historicity place his supposed writing The Art of War in the Warring States Period (476–221 BC), based on the descriptions of warfare in the text. Traditional accounts state that his descendant, Sun Bin, also wrote a treatise on military tactics, titled Sun Bin’s Art of War. (Both Sun Wu and Sun Bin were referred to as Sun Tzu in classical Chinese writings, and some historians thought that Sun Wu was in fact Sun Bin until Sun Bin’s own treatise was discovered in 1972.)
Here are some his quotes from his book ART OF WAR which were originally written on bamboo sticks: Also, underneath the quote is my interpretation of how i relate the quote to trading.
Invincibility lies in the defense; the possibility of victory in the attack.
<<< CASH IS KING: The best offense is defense: We all heard this one before but think about it in trading terms: when you are dealing with a market that is hard to navigate, many good traders will simply stand aside, move to cash and play ‘defense’. They will attack when the opportunities arise but overall know when a battle is worth fighting.
The general who advances without coveting fame and retreats without fearing disgrace, whose only thought is to protect his country and do good service for his sovereign, is the jewel of the kingdom.
<<< Once again, this goes hand in hand with managing losing trades, it’s okay to be wrong and walking away from a wrong trades with grace and poise is needed to long term survival in trading battles. No shame in taking losing trades: it’s part of the game we play: In every war that was won, there were battles that we lost. Needless to say that arrogance and large egos have NO PLACE in trading. Refusal to admit mistakes is when traders get themselves into deep waters. It’s okay to be wrong but it’s not ok to stay wrong. So it’s okay and signs of a very mature trader to retreat when the waters are dangerous or treacherous. NO EGO games in trading.
The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand.
<<< Good traders do their home work and research before tackling on the new market day. Having a watchlist or preset alerts that trigger when certain prices are achieved is the first thing that comes to mind here. Have a battle(game) plan ready and be ready to follow it with strict military precision. Entry, stops and position sizing should be all well calculated within the game plan. (more…)