XXXX

Cindy Hi there!!! ..

For aussie.. i am ready for long buy swing at .99

so what do u say, my friend ?

Eu analysis May 14th 2012
http://www.forexfactory.com/showthre...31#post5663231

c ya

Hey there Mizzle

I'm not 100% sure. .99 is an area I'm looking at, I'm going to wait and see what happens when it gets there.

Also has just just hit a really sharp decline, there's some serious selling going on on this leg. If things don't change fundamentally I think it could go all the way to .96 ish.

Is it just my charts or is that a gap there on the Daily chart since November 23, 2011 that hasn't been closed? Not sure. Finding the markets quite hard to read at the moment.

Really solid support at .99 anyway.

I'm just going to wait and see... I trade mainly from reactions rather than predictions. Certainly an area to watch though for me.

Thanks for your analysis

What's with the frowny face >>>>> ?

.

I have 3 feeds with the same......

Wow... There's probably soooomeone out there somewhere still holding the gap trade lol

cheers

Holding for now Miss Mizzle

Just coming back to update this.

Does anyone know how to close a Journal or thread? Can't see the option.

WOW Cindy... just the info I needed!!

I have no problem getting into profitable positions in almost all my trades now, however I find that because I'm expecting 100 pips or more (at least 2:1 Reward:Risk) I end up closing trades early, or late, rather than at a reasonably good consistant profit... consistancy is the fine tuning my trading needs.

Now to work out a way to apply your "3 things" to my trading.

Cindy, that's a nugget I'm taking home... maybe I don't need to trade bigger.

Hi PT

if I could have inspired just one person with any of the random crap I've posted in here then I am glad.

Good Luck

Going to use this space as a shrine to my favorite posts I've found around the forum over the years by various members.

Instead of saving them somewhere gathering dust on my hard drive it might be beneficial to have them in one place where I can forever access and read them when I need to.

Perhaps some other people may find them also beneficial as I have.

http://www.forexfactory.com/nfs/cust...100877_199.gif
Fudomyo

The Unfettered Mind 1
The Affliction Of Abiding In Ignorance

The term ignorance means the absence of enlightenment. Which is to say, delusion. The abiding place means the place where the mind stops.

The place where the mind stops at one thing is called the abiding place, Abiding signifies stopping, and stopping means the mind is being detained by some matter, which may be any matter at all.

To speak in terms of your own martial art, when you first notice the sword that is moving to strike you, if you think of meeting that sword just as it is, your mind will stop at the sword in just that position, your own movements will be undone, and you will be cut down by your opponent, This is what stopping means.

Although you see the sword that moves to strike you, if your mind is not detained by it and you meet the rhythm of the advancing sword, if you do not think of striking your opponent and no thoughts or judgments remain, if the instant you see the swinging sword your mind is not the least bit detained and you move straight in and wrench the sword away from him, the sword that was going to cut you down will become your own, and, contrarily, will be the sword that cuts down your opponent.

In Zen this is called "Grabbing the spear and, contrariwise, piercing the man who had come to pierce you." The spear is a weapon. The heart of this is that the sword you wrest from your adversary becomes the sword that cuts him down. This is what you, in your style, call "No-Sword."

Whether by the strike of the enemy or your own thrust, whether by the man who strikes or the sword that strikes, whether by position or rhythm, if your mind is diverted in any way, your actions will falter, and this can mean that you will be cut down.

If you place yourself before your opponent, your mind will be taken by him. You should not place your mind within yourself. Bracing the mind in the body is something done only at the inception of training, when one is a beginner.

The mind can be taken by the sword. If you put your mind in the rhythm of the contest, your mind can be taken by that as well. If you place your mind in your own sword, your mind can be taken by your own sword.

Your mind stopping at any of these places, you become an empty shell. You surely recall such situations yourself. We call this stopping of the mind delusion, Thus we say, "The affliction of abiding in ignorance."

The Unfettered Mind 2
The Immovable Wisdom

Immovable means unmoving, wisdom means the wisdom of intelligence.

Although wisdom is called immovable, this does not signify any insentient thing, like wood or stone. It moves as the mind is wont to move forward or back, to the left, to the right, in the ten directions and to the eight points.

The mind that does not stop at all is called immovable wisdom.

Fudo Myoo grasps a sword in his right hand and holds a rope in his left hand. He bares his teeth and his eyes flash with anger. His form stands firmly, ready to defeat the evil spirits that would obstruct the law. This is not hidden in any country anywhere. His form is made in the shape of a protector, while his embodiment is that of immovable wisdom. This is what is shown to living things.

Seeing this form, the ordinary man becomes afraid. The man who is close to enlightenment understands that this manifests immovable wisdom and clears away all delusion. For the man who can make his immovable wisdom apparent and who is able to physically practice this mental dharma as well as Fudo Myoo, negativity will no longer proliferate. This is the purpose of Fudo Myoo's tidings.

What is called Fudo Myoo is said to be one's unmoving mind and an unvacillating body. Unvacillating means not being detained by anything. Glancing at something and not stopping the mind is called immovable. This is because when the mind stops at something, as the breast is filled with various judgments, there are various movements within it. When its movements cease, the stopping mind moves, but does not move at all.

If ten men, each with a sword, come at you with swords slashing, if you parry each sword without stopping the mind at each action, and go from one to the next, you will not be lacking in a proper action for every one of the ten. Although the mind act ten times against ten men, if it does not halt at even one of them and you react to one after another, will proper action be
lacking?

But if the mind stops before one of these men, though you parry his striking sword, when the next man comes, the right action will have slipped away.

Considering that the Thousand-Armed Kannon has one thousand arms on its one body, if the mind stops at the one holding a bow, the other nine hundred and ninety-nine will be useless. It is because the mind is not detained at one place that all the arms are useful. As for Kannon, to what purpose would it have a thousand arms attached to one body? This form is made with the intent of pointing out to men that if their immovable wisdom is let go, even if a body have a thousand arms, everyone will be of use.

When facing a single tree, if you look at a single one of its red leaves, you will not see all the others. When the eye is not set on any one leaf, and you face the tree with nothing at all in mind, any number of leaves are visible to the eye without limit. But if a single leaf holds the eye, it will be as if the remaining leaves were not there. One who has understood this is no different from the Kannon with a thousand arms and a thousand eyes.

The ordinary man simply believes that it is blessed because of its thousand arms and its thousand eyes. The man of half baked wisdom, wondering how anybody could have a thousand eyes, calls it a lie and gives in to slander. But if now one understands a little better, he will have a respectful belief based on principle and will not need the simple faith of the ordinary man or the slander of the other, with this one thing, manifests its principle well.


The ordinary man thinks only on the surface. The man who attacks what he does not understand is even worse. When one practices discipline and moves from the beginner's territory to immovable wisdom, he makes a return and falls back to the level of the beginning, the abiding place. There is a reason for this. Again, we can speak with reference to your own martial art. As the beginner knows nothing about either his body posture or the positioning of his sword, neither does his mind stop anywhere within him. If a man strikes at him with the sword, he simply meets the attack without anything in mind.

As he studies various things and is taught the diverse ways of how to take a stance, the manner of grasping his sword and where to put his mind, his mind stops in many places. Now if he wants to strike at an opponent, he is extraordinarily discomforted. Later, as days pass and time piles up, in accordance with his practice, neither the postures of his body nor the ways of grasping the sword are weighed in his mind. His mind simply becomes as it was in the beginning when he knew nothing and had yet to be taught anything at all.

In this one sees the sense of the beginning being the same as the end, as when one counts from one to ten, and the first and last numbers become adjacent.

In other things, musical pitch for example, when one moves from the beginning lowest pitch to the final highest pitch, the lowest and the highest become adjacent. We say that the highest and the lowest come to resemble each other. When you reach the very depths of the truth, is like the man who knows nothing of either the truth or it's law. It has neither adornment nor anything else that would draw men's attention to it.

The ignorance and afflictions of the beginning, abiding place and the immovable wisdom that comes later become one. The function of the intellect disappears, and one ends in a state of No-Mind-No Thought. If one reaches the deepest point, arms, legs and body remember what to do, but the mind does not enter into this at all.

Bukkoku wrote;

Although it does not
mindfully keep guard,
In the small mountain fields
the scarecrow
does not stand in vain.
Everything is like this.


To make a scarecrow for the mountain fields, one fashions a human figure and puts in its hands a bow and arrow. The birds and beasts see this and flee. Although this figure has absolutely no mind, if the deer become frightened and run away, insofar as it has fulfilled its function, it has not been created in vain.

This is an example of the behavior of the people who have reached the depths of any Way. While hands, feet and body may move, the mind does not stop any lace at all, and one does not know where it is. Being in a state of No-Thought-No-Mind, one has come to the level of the scarecrow of the mountain fields.

Of the common man who has not found his path, we can say that from the very beginning he has had no wisdom and it will never come forth, whatever the circumstances. The wisdom that is highest of all, being in the most remote of all places, will absolutely not come forth. Finally, the half baked know it all lets his wisdom come right off the top of his head, and this is ridiculous, a matter of shame.

There is such a thing as training in principle, and such a thing as training in technique. Principle is as I have already explained above: when you arrive, nothing is noticed. It is simply as though you had discarded all concentration. I have written at length about this above.

If you do not train in technique, but only fill your breast with principle, your body and your hands will not function. Training in technique, if put into terms of your own martial art, is in the training that if practiced over and over again makes the five body postures one.

Even though you know principle, you must make yourself perfectly free in the use of technique. And even though you may wield the sword that you carry with you well, if you are unclear on the deepest aspects of principle, you will likely fall short of proficiency.

Technique and principle are just like the two wheels of a cart.

The Unfettered Mind 3
The Interval Into Which Not Even A Hair Can Be Entered

There is such a thing as an interval into which not even a hair can be put. We can speak about this in terms of your own martial art.

"Interval" is when two things come one upon another, and not even a hairsbreadth can be slipped in between them. When you clap your hands and, just at that instant, let out a yell, the interval between clapping your hands and letting out a yell will not allow the entrance of a hairsbreadth.

This is not a matter of clapping your hands, thinking about yelling, and then doing so, which would result in there being an interval in between. You clap your hands and, just at that instant, let out a sound. In just the same way, if the mind stops with the sword with which a man is going to strike you, there will be an interval, and your own action will be lost. But if in the interval between your opponent's striking sword and your own action you cannot introduce even the breadth of a hair, your opponent's sword should become your own.

In Zen discussions we have the same thing. We abhor this stopping and the mind remaining with one thing or another. We call this stopping affliction. It is like a ball riding a swift-moving current: we respect the mind that flows on like this and does not stop for an instant in any place.

The Unfettered Mind 4
The Action Of Spark And Stone

There is such a thing as the action of spark and stone. This is the same as the foregoing. No sooner have you struck the stone than the light appears. Since the light appears just as you strike the stone, there is neither interval nor interstice. This also signifies the absence of the interval that would stop the mind.

It would be a mistake to understand this simply as celerity. Rather, it underscores the point that the mind should not be detained by things, it says that even with speed it is essential that the mind does not stop. When the mind stops, it will be grasped by the opponent. On the other hand, if the mind contemplates being fast and goes into quick action, it will be captured by its own contemplation.

Among the poems of Saigyo is the following:

One hears of you solely
as a man who abhors the world.
I can only hope
your mind be not detained
by this transient lodging.


If you took the latter part of this verse, "I can only hope your mind be not detained..." it could be cited as hitting the very essence of the martial arts. It is essential that the mind not be detained.

In Zen, if asked, "What is the truth?" one should raise a clenched fist. If asked, "What is the ultimate meaning of the law?" before the words have died away, one should respond, "A single branch of the flowering plum" or "The cypress in the garden." It is not a matter of selecting an answer either good or bad. We respect the mind that does not stop. The non-stopping mind is moved by neither color nor smell.

Although the form of this unmoving mind is revered, and called the Mind of Zen or the Ultimate Meaning, if one thinks things through and afterwards speaks, even though he utter golden words and mysterious verses, it will be merely the affliction of the abiding place. Can it not be said that the action of stone and spark has the speed of a lightning flash? It is immovable wisdom when one is called and answers "Yes?" immediately. When one is called, to hesitate over the why and wherefore of the request is the affliction of the abiding place.

The mind that stops or is moved by something and sent into confusion, this is the affliction of the abiding place, and this is the common man. To be called, to respond without interval, is the wisdom.

When explaining the mind with words, we say such things as "All people possess this mind" or "Good and bad events morning and evening are according to Karma" or "Whether one leaves his house or brings his country to ruin is a reflection of one's character, for both good and evil depend on one's mind." If people are to know what this mind is like, they will only be confused by it if there is no truly enlightened person to show them.

In this world, there are surely people who do not know the mind. It is also clear that people exist who do understand, rare as this may be. Although there occasionally are people who do understand, it does not often happen that they act accordingly; then, although they explain the mind well, it is doubtful that they understand it in depth.

One may explain water, but the mouth will not become wet. One may expound fully on the nature of fire, but the mouth will not become hot. Without touching real water and real fire, one will not know these things. Even explaining a book will not make it understood. Food may be concisely defined, but that alone will not relieve one's hunger. One is not likely to achieve understanding from the explanation of another.

In this world, there are people who explain the mind, but their actions are not like their explanations. The minds of such people are not truly enlightened. If people are not thoroughly enlightened about their own particular minds, they will have no understanding. Many who study do not understand the mind, but it is not a matter of numbers. There is not one of them with a good frame of mind. It must be said that the enlightening of one's mind depends on the depths of one's efforts.

The Unfettered Mind 5
Where One Puts The Mind

We say that:

If one puts his mind in the action of his opponent's body, his mind will be taken by the action of his opponent's body.

If he puts his mind in his opponent's sword, his mind will be taken by that sword.

If he puts his mind in thoughts of his opponent's intention to strike him, his mind will be taken by thoughts of his opponent's intention to strike him.

If he puts his mind in his own sword, his mind will be taken by his own sword.

If he puts his mind in his own intention of not being struck, his mind will be taken by his intention of not being struck.

If he puts his mind in the other man's stance, his mind will be taken by the other man's stance.

What this means is that there is no place to put the mind.


A certain person once said, "No matter where I put my mind, my intentions are held in check in the place where my mind goes, and I lose to my opponent. Because of that, I place my mind just below my navel and do not let it wander. Thus am I able to change according to the actions of my opponent."

This is reasonable. But viewed from the highest standpoint of zen, putting the mind just below the navel and not allowing it to wander is a low level of understanding, not a high one. It is at the level of discipline and training. It is at the level of seriousness. Or of Mencius' saying, "Seek after the lost mind." This is not the highest level either. It has the sense of seriousness. As for the "lost mind," I have written about this elsewhere, and you can take a look at it there.

If you consider putting your mind below your navel and, not letting it wander, your mind will be taken by the mind that thinks of this plan. You will have no ability to move ahead and will be exceptionally unfree. This leads to the next question, "If putting my mind below my navel leaves me unable to function and without freedom, it is of no use. In what part of my body, then, should I put my mind?"

I answered, "If you put it in your right hand, it will be taken by the right hand and your body will lack its functioning. If you put your mind in the eye, it will be taken by the eye, and your body will lack its functioning. If you put your mind in your right foot, your mind will be taken by the right foot, and your body will lack its functioning. "No matter where you put it, if you put the mind in one place, the rest of your body will lack its functioning."

"Well, then, where does one put his mind?"

I answered, "If you don't put it anywhere, it will go to all parts of your body and extend throughout its entirety. In this way, when it enters your hand, it will realize the hand's function. When it enters your foot, it will realize the foot's function. When it enters your eye, it will realize the eye's function. "If you should decide on one place and put the mind there, it will be taken by that place and lose its function. If one thinks, he will be taken by his thoughts.

"Because this is so, leave aside thoughts and discrimination, throw the mind away from the entire body, do not stop it here and there, and when it does visit these various places, it will realize function and action without error."

Putting the mind in one place is called falling into one sidedness. One sidedness is said to be bias in one place. Correctness is in moving about anywhere. The Correct Mind shows itself by extending the mind throughout the body. It is not biased in anyone place. When the mind is biased in one place and lacking in another, it is called a one-sided mind. One-sidedness is despicable. To be arrested by anything, no matter what, is falling into one-sidedness and is despised by those traveling the Way.

When a person does not think, "Where shall I put it?" the mind will extend throughout the entire body and move about to any place at all. Not putting the mind anywhere, can't one use the mind, having it go from place to place, responding to the opponent's movements? If the mind moves about the entire body, when the hand is called into action, one should use the mind that is in the hand. When the foot is called for, one should use the mind that is in the foot. But if you determine one place in which to put it, when you try to draw it out of that place, there it will stay. It will be without function.

Keeping the mind like a tied-up cat and not allowing it to wander, when you keep it in check within yourself, within yourself will it be detained. Forsaking it within your body, it will go nowhere. The effort not to stop the mind in just one place, this is discipline. Not stopping the mind is object and essence. Put nowhere, it will be everywhere. Even in moving the mind outside the body, if it is sent in one direction, it will be lacking in nine others. If the mind is not restricted to just one direction, it will be in all ten.

The Unfettered Mind 6
The Right Mind And The Confused Mind

The Right Mind is the mind that does not remain in one place. It is the mind that stretches throughout the entire body and self. The Confused Mind is the mind that, thinking something over, congeals in one place. When the Right Mind congeals and settles in one place, it becomes what is called the Confused Mind. When the Right Mind is lost, it is lacking in function here and there. For this reason, it is important not to lose it.

In not remaining in one place, the Right Mind is like water. The Confused Mind is like ice, and ice is unable to wash hands or head. When ice is melted, it becomes water and flows everywhere, and it can wash the hands, the feet or anything else.

If the mind congeals in one place and remains with one thing, it is like frozen water and is unable to be used freely, ice that can wash neither hands nor feet. When the mind is melted and is used like water, extending throughout the body, it can be sent wherever one wants to send it.

This is the Right Mind.

The Unfettered Mind 7
The Mind Of The Existent Mind And The Mind Of No Mind

The Existent Mind is the same as the Confused Mind and is literally read as the "mind that exists." It is the mind that thinks in one direction,
regardless of subject. When there is an object of thought in the mind, discrimination and thoughts will arise. Thus it is known as the Existent
Mind.

The No-Mind is the same as the Right Mind. It neither congeals nor fixes itself in one place. It is called No-Mind when the mind has neither discrimination nor thought but wanders about the entire body and extends throughout the entire self.

The No-Mind is placed nowhere. Yet it is not like wood or stone. Where there is no stopping place, it is called No-Mind. When it stops, there is something in the mind. When there is nothing in the mind, it is called the mind of No-Mind. It is also called No-Mind-No-Thought.

When this No-Mind has been well developed, the mind does not stop with one thing nor does it lack anyone thing. It is like water overflowing and exists within itself. It appears appropriately when facing a time of need. The mind that becomes fixed and stops in one place does not function freely. Similarly, the wheels of a cart go around because they are not rigidly in place. If they were to stick tight, they would not go around. The mind is also something that does not function if it becomes attached to a single situation.

If there is some thought within the mind, though you listen to the words spoken by another, you will not really be able to hear him. This is because your mind has stopped with your own thoughts. If your mind leans in the direction of these thoughts, though you listen, you will not hear, and though you look, you will not see. This is because there is something in your mind. What is there is thought. If you are able to remove this thing that is there, your mind will become No-Mind, it will function when needed, and it will be appropriate to its use.

The mind that thinks about removing what is within it will by the very act be occupied. If one will not think about it, the mind will remove these thoughts by itself and of itself become No-Mind. If one always approaches his mind in this way, at a later date it will suddenly come to this condition by itself. If one tries to achieve this suddenly, it will never get there.

An old poem says: To think, "I will not think"--This, too, is something in one's thoughts.

Simply do not think about not thinking at all.

The Unfettered Mind 8 / 9
Throw The Gourd Into The Water, Push It Down And It Will Spin

Pushing down a gourd means to do it with your hand. When a gourd is thrown into the water and pressed down, it will suddenly pop up to one side. No matter what, it is a thing that will not stop in one place. The mind of the man who has arrived does not stop at one thing even for a bit. It is like pushing down the gourd in the water.


Engender The Mind With No Place To Abide

In our Japanese way of writing, this is pronounced omushoju jijogoshin.

Regardless of what a person does, when he engenders the mind that thinks about doing something, the mind stops in that thing. Therefore, one should engender the mind without a place for it to stop. If the mind is not engendered, the hand will not move forward. Those who when moving engender the mind that ordinarily stops in that movement, but do not stop at all in the course of the action, these are called the accomplished men of all Ways.

The mind of attachment arises from the stopping mind. So does the cycle of transmigration. This stopping becomes the bonds of life and death.
One looks at cherry blossoms or autumn leaves, and while engendering the mind that is looking at them, it is essential not to stop with them.

Jien's poem goes:

The flower that would surrender its fragrance
before my brushwood door
Does so regardless.
I, however, sit and stare
How rueful, this world.

This means that the flower gives off its fragrance with No-mind, while I stare at it, my mind going no further. How regrettable, that the mind has so impaled me.

Make it a secret principle in either seeing or hearing not to detain the mind in one place. The word seriousness is elaborated on by the saying, "One aim with no distractions." The mind is settled in one place and is not allowed
elsewhere. Later, even if you unsheathe your sword to strike, it is considered essential not to allow the mind movement in the direction of the strike.

Especially in such matters, one should keep the word seriousness in the mind's eye, having "one aim with no distractions" or "one mind without confusion."

The mentality of seriousness is not the deepest level. Grasping one's mind and not letting it become confused is the discipline of the novice just beginning to learn. This practice, when applied for a long period of time, leads to advancement to the level of freedom in which one can let the mind go in any
direction.

The level mentioned above of "engendering the mind with no place to abide" is the highest level of all. The meaning of the word seriousness is in holding the mind in check and not sending it off somewhere, thinking that if one did let it go, it would become confused. At this level there is a tightening up of the mind and not an iota of negligence is allowed.

This is like a baby sparrow being caught by a cat. To prevent a recurrence, a string is then always tightened around the cat, and it is never let go.
If my mind is treated like a tied up cat, it will not be free and will likely not be able to function as it should. If the cat is well trained, the string is untied, and it is allowed to go wherever it pleases. Then, even if the two are together, the cat will not seize the sparrow.

Acting along these lines is the meaning of the phrase "engendering the mind with no place for it to abide."

Letting go of my mind and ignoring it like the cat, though it may go where it pleases, this will be using the mind in the way of not having it stop.
If we put this in terms of your own martial art, the mind is not detained by the hand that brandishes the sword. Completely oblivious to the hand that wields the sword, one strikes and cuts his opponent down. He does not put his mind in his adversary.

The opponent is Emptiness. I am Emptiness. The hand that holds the sword, the sword itself, is Emptiness. Understand this, but do not let your mind be taken by Emptiness.

When the Zen priest at Kamakura, Mugaku, was captured during the disturbances in China and was at the point of being cut down, he quoted
the gatha, "With the speed of a flash of lightning, cut through the spring breeze," and the soldier threw down his sword and fled.

Mugaku meant that in wielding the sword, in the infinitesimal time it takes lightning to strike, there is neither mind nor thought. For the striking sword, there is no mind. For myself, who is about to be struck, there is no mind. The attacker is Emptiness. His sword is Emptiness. I, who am about to be struck, am Emptiness.

If this is so, the man who strikes is not a man at all. The striking sword is not a sword. And for myself, the person who is about to be cut, in a flash of lightning, it will be like cutting through the breeze that blows across the spring sky. It is the mind that absolutely does not stop. And it is not likely that the sword will react to cutting through the wind.

Completely forget about the mind and you will do all things well.

When you dance, the hand holds the fan and the foot takes a step. When you do not forget everything, when you go on thinking about performing with the hands and the feet well and dancing accurately, you cannot be said to be skillful. When the mind stops in the hands and the feet, none of your acts will be singular. If you do not completely discard the mind, everything you do will be done poorly.

The Unfettered Mind 10
Seek The Lost Mind

This is a saying of Mencius. It means that one should seek out the lost mind and return it to himself.

If a dog, cat or cock has escaped and run off to some other place, one will look for it and return it to his house. Likewise, when the mind, the master of the body, has gone off on a wicked path, why do we not seek after it and restore it to ourselves? This is certainly most reasonable.

But there is also a saying of Shao K'ang-chieh's that goes, "It is essential to lose the mind." This is quite different The general drift is that when the mind is tied down, it tires, and like the cat, is unable to function as it should. If the mind does not stop with things, it will not be stained by them and will be used well. Let it alone to run off wherever it will.

Because the mind is stained and stopped by things, we are warned against letting this happen, and are urged to seek after it and to return it to
ourselves. This is the very first stage of training. We should be like the lotus which is unstained by the mud from which it rises. Even though the mud exists, we are not to be distressed by this. One makes his mind like the well polished crystal which remains unstained even if put in the mud. He lets it go where it wishes.

The effect of tightening up on the mind is to make it un-free. Bringing the mind under control is a thing done only in the beginning. If one remains this way all through life, in the end he will never reach the highest level. In fact, he will not rise above the lowest.

When one is in training, it is good to keep Mencius' saying, "Seek the lost mind," in mind. The ultimate, however, is within Shao K'ang-chieh's,
"It is essential to lose the mind."

Among the sayings of the priest Chung-feng was, "Be in possession of a mind that has been let go of." The meaning of this is exactly the same as Shao K'ang-chieh's dictum saying we should let go of the mind. Its significance is in warning us not to search for the lost mind or to tie it down in one place.
Chung-feng also said, "Make no provision for retreat." This means to have a mind that will not be altered. It means that a man should be mindful that, although he advance well once or twice, he should not retreat when tired or in unusual circumstances.

The Unfettered Mind 11 /12
Throw A Ball In The Swift Current And It Will Never Stop

There is a saying, "Throw a ball into a swift current and it will never stop."
This means that if you throw a ball into rapidly flowing water, it will ride the waves and never stop dead.

Sever The Edge Between Before And After

There is a saying, "Sever the edge between before and after." Not ridding the mind of previous moments, allowing traces of the present mind to remain, both are bad. This means one should cut right through the interval between previous and present.

Its significance is in cutting off the edge between before and after, between now and then. It means not detaining the mind.

The Unfettered Mind 13
Water Scorches Heaven, Fire Cleanses Clouds

Today, burn not the fields of Musashino. Both spouse and I lie hidden in the grasses of spring.

Someone has expressed the meaning of this poem in this way :

As the white clouds come together, The morning glories already fade.

There is something I have thought about only to myself of which I should advise you. And, while I know that it is only my own questionable and humble opinion, I feel that this is the right moment, and so will write down that which I perceive. Since you are a master in the martial arts without equal in past or present, you are most resplendent in rank, stipend and reputation. Waking or sleeping, you should not forget this great boon and in order to return this favor by day and by night, you should think only of fulfilling your loyalty.

Total loyalty is first in making your mind correct, disciplining your body, not splitting your thoughts concerning your lord by even a hairsbreadth, and in neither resenting or blaming others. Do not be neglectful of your daily work. At home be filial, let nothing indecent occur between husband and wife, be correct in formality, do not love mistresses, sever yourself from the path of sensuality, be austere as a parent, and act according to the Way.

In employing underlings, do not make distinctions on the basis of personal feelings. Employ men who are good and bind them to you, reflect on your own deficiencies, conduct the government of your province correctly, and put men who are not good at a distance.

In this way, good men will advance daily, and those who are not will naturally be influenced when they see their lord loving the good. Thus they will leave off evil and turn toward the good themselves.

In this way, both lord and retainer, upper and lower, will be good men, and when personal desire becomes thin and pride is abandoned, the province's wealth will be plenty, the people will be well ruled, children will commune with their parents, and superior and menial will work together as hands and feet. The province should then become peaceful on its own. This is the beginning of loyalty.

Such an absolutely single-minded soldier would probably be your predilection in whatever situation should arise, even if you had the command of hundreds of thousands of men. When the whole mind of the Thousand-Armed Kannon is correct, each of the thousand arms will be of use, in the same way, if the mind of your martial art is correct, the function of your whole mind will be free, and even a thousand foes would be at the mercy of your single sword. Is this not great loyalty?

Whether the mind is correct or not is indiscernible by other people. When any single thought arises, both good and evil are there. If one will think about the foundation of good and evil, and do good and refrain from evil, his mind will become correct of itself. Knowing what is evil but not refraining from it is a sickness of one's own desires. Whether it be from a love of sensuality or self-indulgence, it is a matter of the mind desiring something, Then, even if a good man were present, his good would not be put to use if it didn't strike one's fancy.

To be pleased once with an ignorant man, to take a liking to him, and to give him an appointment while not using the good man that is there, is the same as having no good men at all. Even if one employed several thousand men, there is unlikely to be one who would stand in good stead to his lord in a time of emergency. As for the ignorant young evil men who were once so attractive, their hearts not being correct from the beginning, they would on no account be able to think of sacrificing their own lives when facing a real situation. I have never once heard, even in times past, of men whose minds were not correct standing in good stead to their lords.

The appearance that such a thing may happen when your lordship chooses apprentices is a bitter shame indeed. This is something that nobody knows: from some offbeat inclination, one may be pulled along into bad habits and fall into evil. While you may think that no one knows about these faults, as "there is nothing as clear as that which is dimly seen," if they are known in your own mind, they will also be known by heaven, earth, the gods and the people. If such is the case, is the protection of the province not truly in danger? You should recognize this as great disloyalty.

For example, no matter how ardently you yourself proffer loyalty to your lord, if the people in your clan are not in harmony and the population of Yagyu Valley turn the backs on you, everything you do will come to naught. It is said that, in all things, if you would know a man's good and evil points, you should know the retainers and underlings he loves and employs, and the friends with whom he mixes intimately. If the lord is not correct, none of his retainers and friends will be correct. If this is the case, he will be despised by all and the neighboring provinces will hold him in contempt. But if the lord and his retainers are good, they will be regarded fondly by all.

It is said that a good man is regarded as a jewel by the province. You should make this your own personal experience. When in a place where people recognize you, if you will quickly avoid unrighteousness, put characterless people a distance, and love the wise, the provincial government will become all the more correct and you will be the best of all loyal retainers. Above all, concerning your honored son's behavior, it is going at things backwards to attack a child's wrongdoing if the parent himself is incorrect. If you will first make your own conduct correct and then voice your opinions, not only will he naturally correct himself, but his younger brother, Master Naizen, will learn from his conduct and become correct as well. Thus will father and sons become good men This would be a happy outcome.

It is said that one takes men on or casts them off according to right-mindedness. At this time, as you are a favored retainer, it is absolutely unthinkable that bribes may be handsomely received from all the provincial lords, or that right-mindedness may be forgotten because of avarice. That you enjoy ranbu, that you are prideful of your own ability, and that you push yourself in among the provincial lords showing off this ability, I earnestly believe to be a sickness. Shouldn't you reflect over and over again on the facts that the emperor's recitation is given like Sarugaku, and that the provincial daimyo first in courtesy are the ones most often brought before the shogun?

In the song it says:

It is the very mind itself

That leads the mind astray;

Of the mind,

Do not be mindless.

The Unfettered Mind 14
Annals Of The Sword Taia

Presumably, as a martial artist, I do not fight for gain or loss, am not concerned with strength or weakness, and neither advance a step nor retreat a step. The enemy does not see me. I do not see the enemy. Penetrating to a place where heaven and earth have not yet divided, where Ying and Yang have not yet arrived, I quickly and necessarily gain effect.

"Presumably" indicates something I do not know for sure.

Originally, this character was read with the meaning "lid." For example, when a lid is put on a tier of boxes, although we do not know for sure what has been put inside, if we use our imagination we will hit the mark six or seven times out of ten. Here also I do not know for sure, but figure tentatively that it must be so. Actually, this is a written form we use even about things we do know for sure. We do this to humble ourselves and so as not to seem to be speaking in a knowing manner.

Martial artist is as the characters indicate.

Not to fight for gain or loss, not to be concerned with strength or weakness means not vying for victory or worrying about defeat, and not being concerned with the functions of strength or weakness.

Neither advance a step nor retreat a step means taking neither one step forward nor one step to the rear. Victory is gained without stirring from where you are. The me of "the enemy does not see me" refers to my True Self. It does not mean my perceived self. People can easily see the perceived self, it is rare for them to discern the True Self. Thus I say, "The enemy does not see me."

I do not see the enemy. Because I do not take the personal view of the perceived self, I do not see the martial art of the enemy's perceived self. Although I say, "I do not see the enemy," this does not mean I do not see the enemy right before my very eyes. T o be able to see the one without seeing the other is a singular thing. Well then, the True Self is the self that existed before the division of heaven and earth and before one's father and mother were born. This self is the self within me, the birds and the beasts, the grasses and the trees and all phenomena. It is exactly our true nature.

This self has no shape or form, has no birth, and has no death. It is not a self that can be seen with the aid of your present physical eye. Only the man who has received enlightenment is able to see this. The man who does see this is said to have seen into his own nature and become enlightened.

Long ago, the World Honored One went into the Snowy Mountains, and after passing six years in suffering, became enlightened. This was the enlightenment of the True Self. The ordinary man lacks inner strength, and does not know the persistence of even three or five years. But those who are absolutely diligent for years, twenty-four hours a day. They muster up great strength, speak with those who have wisdom, and disregard adversity and suffering. Like a parent who has lost a child, they do not retreat a scintilla from their established resolution. They think deeply, adding inquiry to inquiry. In the end, they arrive at the place where even the Law of things melt away, and are naturally able to see "This."

Penetrating to a place where heaven and earth have not yet divided, where Ying and Yang have not yet arrived, I quickly and necessarily gain effect means to set one's eye on the place that existed before heaven became heaven and earth became earth, before Ying and Yang came into being. It is to use neither thought nor reasoning and to look straight ahead. In this way, the time of gaining great effect will surely arrive.

Well then, the accomplished man uses the sword but does not kill others. He uses the sword and gives others life. When it is necessary to kill, he kills. When it is necessary to give life, he gives life. When killing, he kills in complete concentration; when giving life, he gives life in complete concentration. Without looking at right and wrong, he is able to see right and wrong; without attempting to discriminate, he is able to discriminate well. Treading on water is just like treading on land, and treading on land is just like treading on water. If he is able to gain this freedom, he will not be perplexed by anyone on earth. In all things, he will be beyond companions.

The accomplished man means the man accomplished in the martial arts. He uses the sword, but not to kill others means that even though he does not use the sword to cut others down, when others are confronted by this principle, they cower and become as dead men of their own accord. There is no need to kill them.

He uses the sword and gives others life means that while he deals with his opponent with a sword, he leaves; everything to the movements of the other man, and is able to observe him just as he pleases. When it is necessary to kill, he kills; when it is necessary to give life, he gives life. When killing, he kills with complete concentration; when giving life, he gives life with complete concentration means that in either giving life or taking life, he does so with freedom in a meditative state that is total absorption, and the meditator becomes one with the object of meditation.

Without looking at right and wrong, he is able to see right and wrong, without attempting to discriminate, he is able to discriminate well. This means that concerning his martial art, he does not look at it to say "correct" or "incorrect," but he is able to see which it is. He does not attempt to judge matters, but he is able to do so well. If one sets up a mirror, the form of whatever happens to be in front of it will be reflected and will be seen. As the mirror does this mindlessly, the various forms are reflected clearly, without any intent to discriminate this from that. Setting up his whole mind like a mirror, the man who employs the martial arts will have no intention of discriminating right from wrong, but according to the brightness of the mirror of his mind, the judgment of right and wrong will be perceived without his giving it any thought.


Treading on water is just like treading on land, and treading on land is just like treading on water. The meaning of this will not be known by anyone unenlightened about the very source of mankind. If the fool steps on land like he steps on water, when he walks on land, he is going to fall on his face. If he steps on water like he steps on land, when he does step onto water, he may think he can actually walk around. Concerning this matter, the man who forgets about both land and water should arrive at this principle for the first time.

If he is able to gain this freedom, he will not be perplexed by anyone on earth. According to this, the martial artist who is able to gain freedom will not be in a quandary about what to do, regardless of who on earth he comes up against. In all things, he will be beyond companions means that as he will be without peer in all the world, he will be j ust like Shakyamuni, who said, "In Heaven above and Earth below, I alone am the Honored One."


Do you want to obtain this? Walking, stopping, sitting or lying down, in speaking and in remaining quiet, during tea and during rice, you must never neglect exertion, you must quickly set your eye on the goal, and investigate thoroughly, both coming and going. Thus should you look straight into things. As months pile up and years pass by, it should seem like a light appearing on its own in the dark. You will receive wisdom without a teacher and will generate mysterious ability without trying to do so. At j ust such a time, this does not depart from the ordinary, yet it transcends it. By name, I call it "Taia."

Do you want to obtain this? "This" points out what was written about above, so the question is whether you are considering obtaining the meaning of the foregoing.

Walking, stopping, sitting or lying down. The four of these - walking, stopping, sitting, lying down, are called the Four Dignities. All people are involved in them. In speaking and in remaining silent means while talking about things or without uttering a word. During tea and during the rice meal while drinking tea and eating rice.

You must never neglect exertion, you must quickly set your eye on the goal, and investigate thoroughly, both coming and going. Thus should you look straight into things. This means that you should never be careless or negligent in your efforts, and you should constantly come back to yourself. You should quickly fix your eye on the goal and continually investigate these principles in depth. Always go straight ahead, considering what is right to be right, and what is wrong to be wrong, while observing this principle in all things.

As months pile up and years pass by, it should seem like a light appearing on its own in the dark means that, in j ust that way, you should carry on with your efforts tirelessly. As you advance with the accumulation of months and years, the acquiring you do on your own of this mysterious principle will be just like suddenly encountering the light from a lantern on a dark night.

You will receive wisdom without a teacher means that you will acquire this fundamental wisdom without its ever having been transmitted to you by a teacher. You will generate mysterious ability without trying to do so. Because the works of the ordinary man all come from his consciousness, they are all actions of the world of created phenomena, and are involved with suffering. At the same time, because actions that are uncreated are generated from this fundamental wisdom, they alone are natural and peaceful.

At just such a time means precisely at such a time. It indicates the time when one receives wisdom without a teacher and generates mysterious ability without trying to do so.

The meaning of this does not depart from the ordinary, yet it transcends it is that this uncreated mysterious ability is not generated from the unusual.

Since only actions that are unremarkably everyday in character become the uncreated, this principle never departs, nor does it separate itself, from the ordinary. Which is still to say that the ordinary actions in the world of created phenomena of the everyday ordinary man are entirely different. Thus it is said that "this does not depart from the ordinary, yet it transcends it."

By name I call it "Taia."

Taia is the name of an [ancient Chinese] sword that has no equal under heaven. This famous jeweled sword can freely cut anything, from rigid metal and tempered steel to dense and hardened gems and stones. Under heaven there is nothing that can parry this blade. The person who obtains this uncreated mysterious ability will not be swayed by the commander of huge armies or an enemy force of hundreds of thousands. This is the same as there being nothing that can impede the blade of this famous sword. Thus I call the strength of this mysterious ability the Sword Taia.

All men are equipped with this sharp Sword Taia, and in each one it is perfectly complete. Those for whom this is clear are feared even by the Maras, but those for whom this is obscure are deceived even by the heretics. On the one hand, when two of equal skill meet at swords' point, there is no conclusion to the match; it is like Shakyamuni's holding the flower and Kashyapa's subtle smile. On the other hand, raising the one and understanding the other three, or distinguishing subtle differences in weight with the unaided eye are examples of ordinary cleverness. If anyone has mastered this, he will quickly cut you into three pieces even before the one has been raised and the three understood. How much more so where you meet him face to face?

All men are equipped with this sharp Sword Taia and in each one it is perfectly complete. This means that the famous Sword Taia, which no blade under heaven can parry, is not imparted just to other men. Everyone, without exception, is equipped with it, it is inadequate for no one, and it is perfectly entire.

This is a matter of the mind. This mind was not born with your birth and will not die with your death. This being true, it is said to be your Original Face. Heaven is not able to cover it. Earth is not able to support it. Fire is not able to burn it, nor is water able to dampen it. Even the wind is unable to penetrate it. There is nothing under heaven that is able to obstruct it.

Those for whom this is clear are feared even by the Maras, but those for whom this is obscure are deceived even by the heretics. For the person who is clearly enlightened concerning his Original Face, there is nothing in the universe that obscures or obstructs his vision. Thus there is no means of enacting the supernatural power of the Maras. Because such a person sees through to the bottom of his own intentions, the Maras fear and avoid him; they hesitate to draw near. Conversely, the person who is obscure and lost concerning his Original Face accumulates any number of confused thoughts and delusions, which then adhere to him. Heretics are easily able to deceive and swindle such a person.

When two of equal skill at this meet at swords' point, there is no conclusion to the match. The meaning of this is that if two men who had both penetrated their Original Face were to meet, each unsheathed the Sword Taia, and they faced off, it would be impossible to bring matters to a conclusion.

The doctrine of "holding the flower...the subtle smile" is difficult to arrive at and is not easily unraveled by guesswork. Although there is really no way to express this principle, if pressed, one might summon up the example of taking water from one vessel and pouring it into another so that the waters become mixed and indistinguishable. Relativity is no longer there.

Among all martial artists of every discipline, there is not one in one hundred thousand who has grasped the purport of "holding the flower. ..the subtle smile." Nevertheless, if one did have the most steadfast of intentions and truly wanted to understand, he would have to discipline himself for another thirty years. Erring in this would not simply be a matter of not mastering martial arts, he would enter hell like an arrow shot from a bow. This is truly a frightening thing. Raising the one and understanding the other three means that as soon as one part is shown, the other three are immediately understood.

Distinguishing subtle differences in weight with the unaided eye. Distinguishing...with the unaided eye means the eye's function, or measurement by the eye. Differences in weight are extremely subtle. The man who is able to measure out any weight of gold and silver by eye and not err by the slightest amount is a clever and skillful person. These are examples of ordinary cleverness signifies that such clever people are ordinary and their number is legion, and thus there is nothing special about them.

If anyone has mastered this, he will quickly cut you into three pieces even before the one has been raised and the three understood. This pertains to the person who has been enlightened. It is he who will quickly cut you into three parts before the one has been raised, the three understood, or before any indication whatsoever appears. Thus I suppose that, in meeting someone like this, there is nothing that could be done. How much more so when you meet him face to face? A man who has gained such celerity and subtlety, when meeting another man face to face, will cut so easily that his opponent will never know that his head has fallen off.

In the end, a man like this never exposes the tip of his sword. Its speed even lightning cannot keep up with it. Its brevity, it is gone even before the quick wind of the storm. Not having such a tactic, if one, in the end, becomes entangled or confused, he will damage his own blade or injure his own hand, and will fall short of adroitness. One does not divine this by impressions or knowledge. There is no transmitting it by words or speech, no learning it by any doctrine. This is the law of the special transmission beyond instruction.

In the end, a man like this never exposes the tip of his sword means that a master never, from the very beginning, shows the tip of his sword. Its speed, even lightning cannot keep up with it. Its brevity, it is gone even before the quick wind of the storm. As for the speed of technique, this means that even the lightning, which is gone j ust as you think you have seen it, cannot pass through this man's movements. As for its brevity, it disappears even faster than the fine grains of sand that are blown before the storm.

Not having such a tactic, if one, in the end, becomes entangled or confused...says that without such skill, if one becomes just a little attached to the raising of his sword or just a little attached to the application of his mind...

He will damage his own blade or inj ure his own hand, and will fall short of adroitness means that he will definitely break off the tip of his own sword, will cut his own hand, and is unlikely ever to be called skillful.

One does not divine this by impressions or knowledge. "Impressions or knowledge" refers to the knowledge and discrimination within the human heart. Divine means calculating and figuring things out. What this means is that no matter how much you try to figure or calculate by means of impressions or knowledge, it will not prove the least bit useful. Therefore, separate yourself from the discrimination of figuring things out.

There is no transmitting it by words or speech, no learning it by any doctrine. For the true martial artist, there is no way to pass this on by words. Moreover, there is no way to teach or learn through doctrine what kind of stance to take or where to strike.

This is the law of the special transmission beyond instruction. It cannot be transmitted with words, and no matter what method one may take, it cannot be taught. Therefore this is called the doctrine of "a special transmission beyond instruction." This is a doctrine outside the teachings of an instructor, a doctrine that particularly requires self-enlightenment and realization on one's own.


There is no established rule for manifesting this great ability. Orderly action, contrary action, even heaven does not determine this. So what is the nature of this thing? The ancients said, "When a house does not have a painting of a Pai Che, it is like having no ghosts at all." If a man has tempered himself and arrived at this principle, he will control everything under heaven with a single sword.

For those who study this, let them not be thoughtless.


There is no established rule for manifesting this great ability. If the "great ability" of the law of this special transmission should manifest itself in front of you, it will do so freely, without the existence of any established rule. And yet it is called the "great ability" because it extends in all the ten directions and is missing from no place by even the tip of a rabbit's hair. An established rule is a law or regulation; there are no laws or regulations such as would mold things concerning the manifestation of this great ability.


Orderly action, contrary action--even heaven does not determine this. The man who manifests this great ability, whether he would act in an orderly way or a contrary way, is free and without obstacles.

So what is the nature of this thing? indicates confronting someone and asking him what something is in fact. The ancients said, "When a house does not have a painting of Pai Che, it is like having no ghosts at all." This is an answer to the preceding question.


The Pai Che has a body like a cow's, a head like a man's, and is an animal like no other known. It eats dreams and misfortunes, and in China they draw a picture of it to put up at the house entrance or to hang on the inner pillars. In short, putting up an illustration of Pai Che is for the purpose of avoiding misfortune. The person who had no ghosts in his house from the very beginning would not even think about making a picture of Pai Che and hanging it somewhere. This is to say that he who has gained the use of either the orderly or the contrary, since even heaven cannot determine what is in his mind, completely transcends pain and pleasure. He has misfortunes in neither body nor home. Because of this, his mind will not hanker after a picture of Pai Che, and his own world will be a thing of beauty.

If a man has tempered himself and arrived at this principle, he will control everything under heaven with a single sword. This means that if one disciplines himself in this way, exhaustively tempering this pure metal a thousand times over, and becomes instantly free like the quick unsheathing of a sword, he should be like the founder of the Han Dynasty, controlling all under heaven with a single sword.

For those who study this, let them not be thoughtless. Those who study the mysterious principle of this sword should not easily take on thoughtless notions, but should strive to heighten their own luster. In intently continuing their own efforts, they should not be negligent, not even for a moment.

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Dopey

This was sent to me by my mentor. It's invaluable, but you really need to internalize it. One thing all good teachers know is that just because I show you something it doesn't mean you're going to learn it, nor does it mean you're going to learn it now. In my journey as a trader, a lot of things have taken quite some time for me to truly learn them. This is one of them.

If you learn nothing else, learn this:

Good Trade – A trade taken in accordance with your rules.

Winning Trade – A trade that makes money.

Bad Trade – A trade taken that is not in accordance with your rules.

Losing Trade – A trade that loses money.


The trading methodology that Richard Dennis taught his Turtles is arguably one of the most difficult trading methods for a typical trader to execute. Not only does it require the trader to hold on to winning positions for extraordinary lengths of time and profit, but also it requires continually adding to that position if the market moves in the direction of the trade. Since adding to positions raises the average price, the Turtles will often give back substantial profits on retracements and often be stopped out of a trade that rode a significant trend with no profit to show for it. While all trend traders play for the outlier, Turtles play for the outlier of the outliers—typically just one trend a year. How is it that they have the discipline to hold on to positions for so long, continually adding all the way? How is it that they can maintain this discipline after having watched so many profitable trades go bust? And how is that such a large percentage of the people Dennis taught were able to do this successfully when these qualities seem so rare?

The answer is that the Turtles learned very early the difference between a Good Trade and a Winning Trade and the difference between a Bad Trade and a Losing Trade. During the two-week training course, Dennis told the Turtles that he wasn’t evaluating them on whether they made money, but whether or not they stuck to the methodology. Since traders could lose money for long periods of time trading his method, it was especially important that they understand that as long as they took Good Trades, they would ultimately make money. Whether or not the trade was a Winning Trade was of no consequence. If these traders evaluated their performance in the short/medium term on profitability, they would have folded a long time ago.

For another example, let’s look at Mark Weinstein (also profiled in Market Wizards). Weinstein has an extraordinary win/loss ratio and has achieved this by being ultra-selective with his trades. As a result, Mark must necessarily pass on an enormous number of trades that subsequently go his way. What would happen to his trading if he lamented every missed opportunity and or lowered his standards every time he “missed” a trade so that it would meet his criteria next time? What would happen if he treated the next trade with a view to “not missing it this time?” I would imagine he’d be like the majority of the people—a losing trader.

Mark isn’t superhuman. He would probably lament the missed trade like anyone else if he actually saw it as a missed trade. But he doesn’t. Mark knows that his job is to take Good Trades. A trade not taken that ultimately “wins” doesn’t bother him because his final decision was that it wasn’t a Good Trade. Many rookie traders would beat themselves up about “missing a trade” and their trading would be negatively affected for the next series of trades, often disastrously.


Knowing the difference between a good trade and a winning trade, and a bad trade and a losing trade will be one of the most profitable, stabilizing, productive distinctions you will ever make in your career as a trader. For the rookie trader, “missing” a winning trade is more demoralizing than taking a losing trade. But by far the worst trade for a developing trader would be the Bad Winning trade. All it serves to do is reinforce behaviors that will ultimately ruin him/her. Many of the traders in Market Wizards made their greatest reforms after taking a disastrous Bad Losing trade. I really hope that all your Bad trades will be losers (though I don’t hope they’re as disastrous). Taking a Good/Bad trade is within your control, taking a Winning/Losing trade isn’t.

How do we best use this information?

1. Create a set of objective rules for determining what constitutes a Good Trade. If there is a discretionary range within the rules, and you were within the discretionary range, the trade is still Good.

2. By default, know that any trade that has yet to be classified as Good is Bad. If you’re still evaluating whether a trade is Good, it is still Bad. All trades are Bad until proven Good.

3. When you take a Good trade that loses, Stand Proud knowing you had the guts to take a small loss.

4. When you don’t take a trade that you had been considering that ultimately wins, Stand Proud and marvel at your ability to recognize the difference between a Good Trade and a Winning trade and act like the professional that you’ve obviously become.

5. Set a time limit within which you will not modify your rules for determining if a trade is Good. You must periodically evaluate your methodology but only at prescribed intervals. Proper risk management rules will prevent you from losing much money if your methodology has ceased working for you.

In G. Soros words:

.....
I am not well qualified to criticize the theory of rational expectations and the efficient market hypothesis because as a market participant I considered them so unrealistic that I never bothered to study them. That is an indictment in itself but I shall leave a detailed critique of these theories to others.

Instead, I should like to put before you a radically different approach to financial markets. It was inspired by Karl Popper who taught me that people’s interpretation of reality never quite corresponds to reality itself. This led me to study the relationship between the two. I found a two-way connection between the participants’ thinking and the situations in which they participate. On the one hand people seek to understand the situation; that is the cognitive function. On the other, they seek to make an impact on the situation; I call that the causative or manipulative function. The two functions connect the thinking agents and the situations in which they participate in opposite directions. In the cognitive function the situation is supposed to determine the participants’ views; in the causative function the participants’ views are supposed to determine the outcome. When both functions are at work at the same time they interfere with each other. The two functions form a circular relationship or feedback loop. I call that feedback loop reflexivity. In a reflexive situation the participants’ views cannot correspond to reality because reality is not something independently given; it is contingent on the participants’ views and decisions. The decisions, in turn, cannot be based on knowledge alone; they must contain some bias or guess work about the future because the future is contingent on the participants’ decisions.

Full Text Here:

http://www.businessinsider.com/full-...#ixzz25JhQVHuZ

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mjotic

Trading is a business.

You can run it like a dollar store.

You can run it like a Louis Vuitton store.

Or you can do something in between.


The difference between running it like a dollar store or like a Louis Vuitton store is the profit margin per item sold. (Margin = Sales - Cost of Goods Sold)

If you're running a dollar store you're making very little margin per sale but looking for a high volume of sales.

If you're running a Louis Vuitton store you'll have few sales but your margin will be incredibly high. Only a few sales will give you a lot of revenue.

What are the risks to these kinds of businesses?

Dollar Store (elastic demand)
- Competition reduces your selling price
- Cost of goods sold increases
- Sales volume decreases

Louis Vuitton (inelastic demand)
- Sales volume decreases


Luxury retailers do not compete on price therefore selling price pressure is unlikely. Your major worry as a luxury retailer is that you go through a period where there isn't demand for your goods and you can't pay your overhead.


How does this relate to trading?

- Dollar Store = scalper
- Louis Vuitton = longer term position trader

Why?

- Dollar store: Quick sales and plenty of them over a year
- Louis Vuitton: Very few sales over a year

This tells you how often you should be entering the market giving the kind of profit per trade you're looking to capture....


I'm on my way to become successful in this business and I know it. I've already gotten what I needed from this forum to make money.

If you're unsuccessful and you can't understand the analogies I've made well.... I don't know what to tell you.


Love

Marko

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grkfx

I know the thread title is about cluster of stops on chart. And yes charts can be helpful to locate the support/resistance and possible stop locations,etc. But in the end it is all about order, and what will generate order flow.

This thread has far too many charts posted in my opinion. Sometimes they can get in the way of taking your trading to the next level, as you can be grappling with learning the new order flow mentality, but that old technical analysis/chart mentality can be dead weight on your shoulders. And as such many people keep going back to the charts to find the secret patterns, the secret stop hunts, the secret indicators, the secret support and resistance, the special VSA, etc that they believe can help them become an order flow trader. I know, I went through a similar phase.

Let me propose an exercise that may or may not help you. Get rid of all your charts, get rid of all your computers. You are not allowed to look at a chart. You can have some books with you as long as they do not have charts, you can save forum posts and stuff and print them out to have them handy.

Sit down and think deeply about the market, about the structure, about the liquidity, about the emotions of the market participants, the expectations of the market. Think about what would cause price to move, what would cause price to move 40 pips, to move 100 pips, to move 400 pips, to move 1,000 pips.

Then play out scenarios in your head about different market setups and market participants. Write down a list of 10 things which you know will generate order flow and price movement. Write out 10 scenarios where the different market participants are battling it out and who will win. Write down 10 ideal order flow setups entries and exits. Think about liquidity vacuum, stops, etc and how they can play together.

Don't stop or go back to charts until you are done. If at the end, your list is filled with things like moving averages, price hitting a chart s/r level, or stochastic divergence, or anything related to a chart pattern, or charts in general, then I would be very skeptical. Chances are you need to redouble your efforts and think more and search more about what will really generate order flow.

Whether you choose to do the exercise or not, I hope it helps.

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Darkstar

The Structure of Forex Brokers

There has been much discussion of late regarding borker spreads and liquidity. Many assumptions are being made about why spreads are widened during news time that are built on an incomplete knowledge of the architecture of the forex market in general. The purpose of this article is to dissect the market and hopefully shed some light on the situation so that a more rational and productive discussion can be undertaken by the Forex Factory members.

We will begin with an explanation of the purpose of the Forex market and how it is utilized by its primary participants, expand into the structure and operation of the market, and conclude with the implications of this information for speculators. With that having been said, let us begin.

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EDIT: I have received numerous requests for readers to share this information on other forums. I have no problem with anyone doing so provided they include the following statement, and a link to this page, prior to posting the content:


Unlike the various bond and equity markets, the Forex market is not generally utilized as an investment medium. While speculation has a critical role in its proper function, the lion’s share of Forex transactions are done as a function of international business.

The guy who buys a shiny new Eclipse more then likely will pay for it with US Dollars. Unfortunately Mitsubishi’s factory workers in Japan need to get their paychecks denominated in Yen, so at some point a conversion needs to be made. When one considers that companies like Exxon, Boeing, Sony, Dell, Honda, and thousands of other international businesses move nearly every dollar, real, yen, rubble, pound, and euro they make in a foreign country through the Forex market, it isn’t hard to understand how insignificant the speculative presence is; even in a $2tril per day market.

By and large, businesses don’t much care about the intricacies of exchange rates, they just want to make and sell their products. As a central repository of a company’s money, it was only natural that the banks would be the facilitators of these transactions. In the old days it was easy enough for a bank to call a foreign bank (or a foreign branch of ones own bank) and swap the stockpiles of currency each had accumulated from their many customers.

Just as any business would, the banks bought the foreign currency at one rate and marked it up before selling it to the customer. With that the foreign exchange spread was born. This was (and still is) a reasonable cost of doing business. Mitsubishi can pay its customers and the banks make a nice little profit for the hassle and risks associated with moving around the currency.

As a byproduct of transacting all this business, bank traders developed the ability to speculate on the future of currency rates. Utilizing a better understanding of the market, a bank could quote a business a spread on the current rate but hold off hedging until a better one came along. This process allowed the banks to expand their net income dramatically. The unfortunate consequence was that liquidity was redistributed in a way that made certain transactions impossible to complete.

It was for this reason and this reason alone that the market was eventually opened up to non-bank participants. The banks wanted more orders in the market so that a) they could profit from the less experienced participants, and b) the less experienced participants could provide a better liquidity distribution for execution of international business hedge orders. Initially only megacap hedge funds (such as Soros’s and others) were permitted, but it has since grown to include the retail brokerages and ECNs.

Market Structure:

Now that we have established why the market exists, let’s take a look at how the transactions are facilitated:

The top tier of the Forex market is transacted on what is collectively known as the Interbank. Contrary to popular belief the Interbank is not an exchange; it is a collection of communication agreements between the world’s largest money center banks.

To understand the structure of the Interbank market, it may be easier to grasp by way of analogy. Consider that in an office (or maybe even someone’s home) there are multiple computers connected via a network cable. Each computer operates independently of the others until it needs a resource that another computer possesses. At that point it will contact the other computer and request access to the necessary resource. If the computer is working properly and its owner has given the requestor authorization to do so, the resource can be accessed and the initiating computers request can be fulfilled. By substituting computers for banks and resources for currency, you can easily grasp the relationships that exist on the Interbank.

Anyone who has ever tried to find resources on a computer network without a server can appreciate how difficult it can be to keep track of who has what resources. The same issue exists on the Interbank market with regard to prices and currency inventory. A bank in Singapore may only rarely transact business with a company that needs to exchange some Brazilian Real and it can be very difficult to establish what a proper exchange rate should be. It is for this purpose that EBS and Reuters (hereafter EBS) established their services.

Layered on top (in a manner of speaking) of the Interbank communication links, the EBS service enables banks to see how much and at what prices all the Interbank members are willing to transact. Pains should be taken to express that EBS is not a market or a market maker; it is an application used to see bids and offers from the various banks.

The second tier of the market exists essential within each bank. By calling your local Bank of America branch you can exchange any foreign currency you would like. More then likely they will just move some excess currency from one branch to another. Since this is a micro-exchange with a single counterparty, you are basically at their mercy as to what exchange rate they will quote you. Your choice is to accept their offer or shop a different bank. Everyone who trades the forex market should visit their bank at least once to get a few quotes. It would be very enlightening to see how lucrative these transactions really are.

Branching off of this second tier is the third tier retail market. When brokers like Oanda, Forex.com, FXCM, etc. desire to establish a retail operation the first thing they need is a liquidity provider. Nine in ten of these brokers will sign an agreement with just one bank. This bank will agree to provide liquidity if and only if they can hedge it on EBS inclusive of their desired spread. Because the volume will be significantly higher a single bank patron will transact, the spreads will be much more competitive. By no means should it be expected these tier 3 providers will be quoted precisely what exists on the Interbank. Remember the bank is in the business of collecting spreads and no agreement is going to suspend that priority.

Retail forex is almost akin to running a casino. The majority of its participants have zero understanding how to trade effectively and as a result are consistent losers. The spread system combined with a standard probability distribution of returns gives the broker a built in house advantage of a few percentage points. As a result, they have all built internal order matching systems that play one loser off against a winner and collect the spread. On the occasions when disequilibrium exists within the internal order book, the broker hedges any exposure with their tier 2 liquidity provider.

As bad as this may sound, there are some significant advantages for speculators that deal with them. Because it is an internal order book, many features can be provided which are otherwise unavailable through other means. Non-standard contract sizes, high leverage on tiny account balances, and the ability to transact in a commission free environment are just a few of them…

An ECN operates similar to a Tier 2 bank, but still exists on the third tier. An ECN will generally establish agreements with several tier 2 banks for liquidity. However instead of matching orders internally, it will just pass through the quotes from the banks, as is, to be traded on. It’s sort of an EBS for little guys. There are many advantages to the model, but it is still not the Interbank. The banks are going to make their spread or their not go to waste their time. Depending on the bank this will take the form of price shading or widened spreads depending on market conditions. The ECN, for its trouble, collects a commission on each transaction.

Aside from the commission factor, there are some other disadvantages a speculator should consider before making the leap to an ECN. Most offer much lower leverage and only allow full lot transactions. During certain market conditions, the banks may also pull their liquidity leaving traders without an opportunity to enter or exit positions at their desired price.

Trade Mechanics:

It is convenient to believe that in a $2tril per day market there is always enough liquidity to do what needs to be done. Unfortunately belief does not negate the reality that for every buyer there MUST be a seller or no transaction can occur. When an order is too large to transact at the current price, the price moves to the point where open interest is abundant enough to cover it. Every time you see price move a single pip, it means that an order was executed that consumed (or otherwise removed) the open interest at the current price. There is no other way that prices can move.

As we covered earlier, each bank lists on EBS how much and at what price they are willing to transact a currency. It is important to note that no Interbank participant is under any obligation to make a transaction if they do not feel it is in their best interest. There are no “market makers” on the Interbank; only speculators and hedgers.

Looking at an ECN platform or Level II data on the stock market, one can get a feel for what the orders on EBS look like. The following is a sample representation:

You’ll notice that there is open interest (Level II Vol figures) of various sizes at different price points. Each one of those units represents existing limit orders and in this example, each unit is $1mil in currency.

Using this information, if a market sell order was placed for 38.4mil, the spread would instantly widen from 2.5 pips to 4.5 pips because there would no longer be any orders between 1.56300 and 1.56345. No broker, market maker, bank, or thief in the night widened the spread; it was the natural byproduct of the order that was placed. If no additional orders entered the market, the spread would remain this large forever. Fortunately, someone somewhere will deem a price point between those 2 figures an appropriate opportunity to do something and place an order. That order will either consume more interest or add to it, depending whether it is a market or limit order respectively.

What would have happened if someone placed a market sell order for 2mil just 1 millisecond after that 38.4 mil order hit? They would have been filled at 1.5630 Why were they “slipped”? Because there was no one to take the other side of the transaction at 1.56320 any longer. Again, nobody was out screwing the trader; it was the natural byproduct of the order flow.

A more interesting question is, what would happen if all the listed orders where suddenly canceled? The spread would widen to a point at which there were existing bids and offers. That may be 5,7,9, or even 100 pips; it is going to widen to whatever the difference between a bid and an offer are. Notice that nobody came in and “set” the spread, they just refused to transact at anything between it.

Nothing can be done to force orders into existence that don’t exist. Regardless what market is being examined or what broker is facilitating transactions, it is impossible to avoid spreads and slippage. They are a fact of life in the realm of trading.


Implications for speculators:

Trading has been characterized as a zero sum game, and rightly so. If trader A sells a security to trader B and the price goes up, trader A lost money that they otherwise could have made. If it goes down, Trader A made money from trader B’s mistake. Even in a huge market like the Forex, each transaction must have a buyer and a seller to make a trade and one of them is going to lose. In the general realm of trading, this is materially irrelevant to each participant. But there are certain situations where it becomes of significant importance. One of those situations is a news event.

Much has been made of late about how it is immoral, illegal, or downright evil for a broker, bank, or other liquidity provider to withdraw their order (increasing the spread) and slip orders (as though it was a conscious decision on their part to do so) more then normal during these events. These things occur for very specific reasons which have nothing to do with screwing anyone. Let us examine why:

Leading up to an economic report for example, certain traders will enter into positions expecting the news to go a certain way. As the event becomes immanent, the banks on the Interbank will remove their speculative orders for fear of taking unnecessary losses. Technical traders will pull their orders as well since it is common practice for them to avoid the news. Hedge funds and other macro traders are either already positioned or waiting until after the news hits to make decisions dependent on the result.

Knowing what we now know, where is the liquidity necessary to maintain a tight spread coming from?

Moving down the food chain to Tier 2; a bank will only provide liquidity to an ECN or retail broker if they can instantly hedge (plus their requisite spread) the positions on Interbank. If the Interbank spreads are widening due to lower liquidity, the bank is going to have to widen the spreads on the downstream players as well.

At tier 3 the ECN’s are simply passing the banks offers on, so spreads widen up to their customers. The retailers that guarantee spreads of 2 to 5 pips have just opened a gaping hole in their risk profile since they can no longer hedge their net exposure (ever wonder why they always seem to shut down or requote until its over?). The variable spread retailers in turn open up their spreads to match what is happening at the bank or they run into the same problems fixed spreads broker are dealing with.

Now think about this situation for a second. What is going to happen when a number misses expectations? How many traders going into the event with positions chose wrong and need to get out ASAP? How many hedge funds are going to instantly drop their macro orders? How many retail traders’ straddle orders just executed? How many of them were waiting to hear a miss and executed market orders?

With the technical traders on the sidelines, who is going to be stupid enough to take the other side of all these orders?

The answer is no one. Between 1 and 5 seconds after the news hits it is a purely a 1 way market. That big long pin bar that occurs is a grand total of 2 prices; the one before the news hit and the one after. The 10, 20, or 30 pips between them is called a gap.

Is it any wonder that slippage is in evidence at this time?

Conclusions:

Each tier of the Forex market has its own inherent advantages and disadvantages. Depending on your priorities you have to make a choice between what restrictions you can live with and those you cant. Unfortunately, you can’t always get what you want.

By focusing on slippage and spreads, which are the natural byproduct of order flow, one is not only pursuing a futile ideal, they are passing up an enormous opportunity to capitalize on true inefficiencies. News events are one of the few times where a large number of players are positioned inappropriately and it is fairly easy to profit from their foolishness. If a trader truly wants to make the leap to the next level of profitability they should be spending their time figuring out how identify these positions and trading with the goal of capturing the price movement they inevitably will cause.

Nobody is going to make the argument that a broker is a trader’s best friend, but they still provide a valuable service and should be compensated for their efforts. By accepting a broker for what it is and learning how to work within the limitations of the relationship, traders have access to a world of opportunity that they otherwise could never dream of capturing. Let us all remember that simple truth.