he Master Trader

  by Reynaldo Soriano Jr.

in Finance    (submitted 2007-07-11)

I have always compared trading to martial arts because they are psychologically the same. Like martial arts, there are different levels of trading.

At the entry level, a trader is similar to a martial arts white belt, and has just started searching for the right trading system. The belief of beginners is that after they go to a seminar or read a trading book for the first time, they will soon make lots of money. They are convinced that trading will make them millionaires in a short period of time. Most of them would also like to leave their jobs as soon as possible.

The second level of traders is the blue belt level. This type of trader is learning that trading can be easy or tough. When challenged, they will either persist and keep going to more seminars, looking for the "holy grail," or they will give up and play the victim, saying that trading is "risky." I call this the break-out stage. They either remain or leave.

The third level of traders is the black belt level. These traders start to realize that psychology plays a big role in trading. They also start to learn more about themselves. They begin to perfect their trading skills systematically and psychologically.

The fourth level of traders is the master level--the highest level of trading. When they trade, they are at one with the market physically, psychologically, and spiritually. They feel the market and they have no fear. They control their emotions when challenged and they take full responsibility of their own actions. In ancient Japanese, this is called Mushin.

Mushin is:

"a state into which very highly trained martial artists are said to enter during combat. The term is shortened from mushin no shin (無心の心), a zen expression meaning mind of no mind. That is, a mind not fixed or occupied by thought or emotion and thus open to everything.

Mushin is achieved when a fighter feels no anger, fear, or ego during combat. There is an absence of discursive thought, and so the fighter is totally free to act and react towards an opponent without hesitation. At this point, a person relies not on what they think should be the next move, but what is felt intuitively.

A martial artist would likely have to train for many years to be capable of mushin. This allows time for combinations of movements and exchanges of techniques to be practised repetitively many thousands of times, until they can be performed spontaneously, without conscious thought.

The legendary Zen master Takuan Soho said:

The mind must always be in the state of 'flowing,' for when it stops anywhere that means the flow is interrupted and it is this interruption that is injurious to the well-being of the mind. In the case of the swordsman, it means death. When the swordsman stands against his opponent, he is not to think of the opponent, nor of himself, nor of his enemy's sword movements. He just stands there with his sword which, forgetful of all technique, is ready only to follow the dictates of the subconscious. The man has effaced himself as the wielder of the sword. When he strikes, it is not the man but the sword in the hand of the man's subconscious that strikes.

However, mushin is not just a state of mind that can be achieved during combat. Many martial artists, particularly those practicing Japanese martial arts such as aikido or iaijutsu, train to achieve this state of mind during kata so that a flawless execution of moves is accomplished - that they may be achieved during combat or at any other time. Once mushin is attained through the practicing or studying of martial arts (although it can be accomplished through other arts or practices that refine the mind and body), the objective is to then attain this same level of complete awareness in other aspects of the practitioner's life." - wikipedia

You don't have to be a martial artist to achieve Mushin in trading. Mushin can be achieved through experience and lots of practice. How?, you may ask. The answer is by constantly back testing your trading system, following your trading rules, eating a balanced diet, exercising daily, practicing daily meditation and visualisation, and having ample rest prior to trading. When you have a free mind, you will be in flow with the market and you will be at one with the market. You don't think about the stock, you just react to the market's movement without hesitation and fear.

To reach the master level, one must have discipline, commitment, determination, passion, and the openness to learn. Once you reach this level, I totally guarantee you, you will be rewarded with more consistent profits.

If you'd like to know more about the techniques you can use to achieve Mushin, or the skills required to reach the master level, contact me at reynaldo@onlinetradingcfd.com.

About the Author

Reynaldo Soriano Jr. is an Australian based trader, investor, and businessman with a passion for share trading. He is a professional online trader, educator, and trader coach. He has traded equities, options, Forex, Indices, and CFDs and spent two years in the United States trading and studying the US market. http://www.onlinetradingcfd.com