Based on reading the book Sun Tzu for Success, written by Gerald Michaelson, whose original title is “Sun Tzu for Success”, we have extracted some of the main concepts indicated there and we have adapted and focused them towards an optimal preparation and performance of the trader who enters the dangerous sands of the financial markets.
Regarding Sun Tzu, we know that he was a legendary Chinese general and mercenary who lived around 512 B.C. Author of the book The Art of War, a famous Chinese book that talks about military strategy and tactics.
If we start our story with the description of the book in its original version and adapting it to the trading battle scenario, we have selected from among several guidelines and rules mentioned in the book, four basic principles that can be useful in creating a winning attitude for traders who day by day are faced with the unique battles that foster financial markets.
In this article, the analogy of the trading scenario with the battle is not meant to imply in any way that trading or the market itself is the enemy we must fight, no! As will be seen throughout this brief approach, the enemy to be fought in battle is everything that represents an obstacle to our success in trading, all without exception, even if we have to include ourselves as another obstacle.
Get to Know Yourself
Know your enemy and know yourself, and you can fight a hundred battles without danger of being defeated. If you don’t know your enemy and you don’t know yourself, you can rest assured that you will be defeated in every battle.
Self-perception is the golden key to success. Each of us is perceived as three distinct people:
* What we think we are;
* What others think we are;
* What we really are.
The most important of the three is “who we really are.” This search for personal identity can even represent the search for a lifetime. In this way, the sum of the information we can get from what others think of us about our way of trading alongside our own self-perception is vital to getting to know ourselves. We should not rule out that the enemy we must fight in battle is ourselves, that is, a part of us that prevents us from achieving success in trading.
Identify Your Personality
There are many ways to classify personality, but roughly we could make a classification into two groups: people who make their decisions based on logic and reasoning, and people who base their decisions on emotions.
Evidently, almost no human being conforms 100% to one of these two categories, however, in daily life and particularly when trading, we can appreciate if one of these ways of acting in each of us predominates. On the other hand, an intelligent mind will use each of these ways of making decisions according to the case in hand.
There will be decisions that require more emotional than rational inclination and vice versa. However, if we stop to look at our present and past ways of acting, we can see that just as there is a trend in the markets, in our personality there is also a tendency to act in a predominantly rational or emotional way.
However, if we are dealing with a trading platform, we must be sure that we are acting properly in this case, that is to say in a logical and rational way. If we are not doing it and we realize it then this is not a problem precisely because we have realized it, if instead we do it but we do not realize it (or we do not want to realize it) Then we’re in trouble, and sooner or later we’ll get the bill.
The key to this lesson is that self-knowledge is the foundation of success. Let us always remember that transforming oneself is much healthier than trying to transform others. An Ancient Chinese philosopher, Lao Tzu, reveals an important truth when he states:
“He who knows others is wise. He who knows himself is enlightened.”
So, the more you know about yourself, about how you do trading the more you can evolve on the path to becoming a successful trader. Always listen to what they say about you in your environment, even though you don’t like everything they say, think it’s information, it’s knowledge about yourself and you have to treasure it for your own evolution as a trader.
Recognize the Battlefield
This issue has to do with the information. The more information we have about the market or markets with which jobs we will be better prepared for the battle. Trading is not an easy task and undertaking an operation with little or no training or information is like attending the center of a melee battlefield between two sides completely naked. Therefore, the trader must:
- Finding out about interest markets
- Read books and watch specialized videos
- Learn and value the experiences of people who have won
- Learning and valuing the experiences of people who have lost
- Attend specialized courses
- Learn about and test new trading programs and platforms
- Have suitable and modern hardware to avoid technical obstacles
- Research new and potential strategies that work in the markets
- Keep up to date, find out and compare commissions, guarantees, tax aspects, etc.
Nothing should be neglected, no detail. Everything is important, including of course the information of who we are, as we may be the worst enemy capable of sabotaging our best strategy.
Develop Good Strategies
With all the information gathered in the above steps that are equivalent to having a good knowledge of yourself and the battlefield in the markets of interest, design strategies that are adapted both to the markets in which you intend to operate, as well as the characteristics of his personality.
If you are a person who has very little control over your emotional states, is easily altered, and tends to overreact to sudden changes in your environment, it may not be convenient for you to trade in intraday or Forex markets in reduced time frames, being perhaps a good recommendation to adjust the time frame to your reaction times. Keep in mind that when you put a good strategy to work in real-time, it will expose its benefits or not, depending on whether or not we are able to accept and implement your recommendations. To prevent us from entering into a future conflict with our strategy, it is important that it be “compatible” with our way of seeing or interpreting the markets in which we operate. In short, develop good strategies based on solid information and prepare yourself for the battlefield.
Execute the Action
Once you have already developed and tested your or your strategies, take action (enter the market) safely and decisively without neglecting the continuous exercise of discipline and self-knowledge, because during this new phase you will discover new things about yourself that will serve to optimize your overall strategy.
Take the initiative of the action: In every battle, the one who strikes first is the one who has the advantage. Taking a determined and clear attitude when launching your strategy reflects that you are clear about everything that may have been outlined in your trading plan. It is not at any point to act viscerally guided under irrational impulses but quite the contrary, it is to strictly follow the tactics and strategies for which you have previously trained. Now, in this plane of action, it must be certain.
Develop a spirit based on offense: This pattern in trading is more focused on maintaining a simple anticipatory attitude to any eventuality, represents the implementation of anticipatory control, not letting anything escape, not leaving room for improvisation. It is a process in which you can optimize on the fly but always stick to the script (your trading plan). If you have done your homework well then you should not be making any substantive changes to your strategy at this time, if you do it it would be better to step back and abandon the battle in time.
Keep on the move: The idea of this topic is to maintain a permanent alert, this is where you put into practice your main faculties as a human being, develop a high level of attention and focus and a power of recovery or dynamic memory, in such a way that your mind controls absolutely every detail to ensure success. This is the heart of the battle and will be the prelude to success.