Trading wisdom from 30 Under 30

I have whole month planning and it is based on long term trading. Because I know planning is very necessary for successful trading and we can not succeed in forex without good planning.

So... I'm actually at 'work' in the office right now.. and I haven't put in a single trade on any of the customer accounts all week.

So I suppose I might as well post another story that I've been thinking about recently.

Surfing and Trading


I picked up surfing this week . And I really mean surfing: under the sun, at a beach, on ocean waves. I went three times just this week with friends who have had many years experience (and their own boards). No, but trust me, they're really good.

Riding along the coast and looking out into the vast, blue ocean, I was already thinking about how to relate it all to trading (maybe since I was basically cutting work to go).

But it took me a while to process how to relate ocean and market waves, the ebb and tide, falling down, and going with the flow. I'll only relate things that I know that I think that are similar between surfing and trading. To those that think that I'll start talking about Elliot Waves? Nope, sorry, don't know enough about that!

Anyways, so I came up with a few things that I'd like to share.

The first time my friends took me, on Monday, was to a beach where the waves were large and choppy. The beach consisted of more rocks than sand too. It was my first time paddling out into the ocean and it was difficult. I ended up with a mouthful of sea water. Paddling out to get behind the waves to where more experienced surfers waited (at the line) was half the journey, the other big part was to then actually catch a wave. I made it quite far out into the ocean, I was surprised to see the shoreline looking so small, but then I decided to go back ashore since I was pretty tired. After an hour I tried to go out again, but the waves had become even choppier and I was worn out from my first try, so I didn't make it very far.

The second time we went, on Wednesday, was to the same location, except the swell had increased dramatically: There were huge, 8-10 ft waves. I saw my friends paddling out and so I followed them. I immediately realized that paddling out this time was much harder than the first time we went. The sets of waves were many, the calm breaks in the waves were far and few in between. I made it nowhere and actually cracked my board coming back ashore (the waves close to the shore were strong and caused my surfboard to nose-dive onto the beach). I watched from the beach as my friends, far away, still struggled against the waves. They were also being pulled way off to the right by currents. 20 minutes later they came back in, unable to breach the last line of waves.

The third time we went, which was today (Friday), it was to a different beach, where the waves were calmer and very suitable for beginners. I managed to stand up on my board for a few seconds and got a feel for what riding a wave was like. The waves gave me a little speed and I felt a bit of a rush while I was trying to stand up with ocean water swirling around me. It was pretty awesome.

Ok, so enough with the diary.

When trying to catch a wave, if I went too fast and the wave broke and came up from behind me, the water would send my surf board nose-diving into the water and send me barreling right along with it. If I went too slow, then the wave would pass in front of me and I wouldn't be able to catch it. The only thing I could control was to get a feel for the timing of the wave to prepare for it, and to paddle fast or slow accordingly.

I want to be able to get a feel for the markets too, just like I had started to do with ocean waves.

The two different beaches that my friends took me to had very different characteristics. One was very rocky, I easily scraped my toe and knee, and the water deepened quickly. The waves there were large and impossible to paddle through, although if you did, there would be a tremendous reward of catching a large wave. The other beach was very soft and sandy, and the waters very shallow. The waves there were easier to catch, but not so exciting or dangerous.

The two beaches remind me of different currency pairs. Some pairs move more than others, and each has it's own characteristic (ex: some are more manipulated than others). But the waves I came upon were all part of the Pacific Ocean and thus they shared a common source. If I understood ocean currents and geography better I could explain the effects of the Pacific Ocean on causing one beach to have really scary waves and the other to have very calm ones.

Just like in the fx markets, currency pairs are all related to another in some way, especially since the majors are all paired off with the USD. Even cross-pairs have a certain relationship to their crosses.

On the first day that I went, there were a lot of pros just patiently waiting out there for a good wave to catch, watching the sets of 3-5 waves and deciding which one to go for. They were very patient and calm, but they were always ready, trained and prepared, for when that one good wave came by that they wanted to catch, they were all about their focus and training. There was even a scout taking pictures from a higher vantage point near the beach.

Ok, so I admit, none of this is at all an "eureka moment" or a new and awesome break-through discovery about the markets.

But I do have one thing to say: I can't wait until I start riding the ups and downs of the markets like a pro.

Hey ElComandante, thanks for your response.

Yeah, Chapter 1 is all about planning. I think that the execution of the plan is just as important, it's only through the actual testing out of plans that we learn if it's viable or not.. Feels very much like theory until implemented..

Seriously though, I get pretty tired with planning...

Chapter 4: Tactical Dispositions.
- Opposing armies would try and figure out the disposition of the other army. "Being secret brings the victory; being transparent, defeat."

1. Sun Tzu said: The good fighters of old first put themselves beyond the
possibility of defeat, and then waited for an opportunity of defeating the
enemy.
- Preparation and practice to understand oneself, one's strengths and weaknesses and how to protect the enemy from attacking your weakness. Understand the enemy in order to not fall for his tricks, then wait for the right moment. Of course, first make yourself invulnerable (from yourself) before you go attacking the enemy's vulnerability when it appears.

2. To secure ourselves against defeat lies in our own hands, but the opportunity
of defeating the enemy is provided by the enemy himself.
- I imagine two opponents, both highly skilled and trained, mirror images. Victory will not be by show of strength but by seeing who slips up first.

How many times in the market are we battling ourselves, thinking and rethinking orders and entry points and second guessing and shooting ourselves in the foot?

Other translation:

Of old,
The Skillful Warrior
First Ensured
His own
Invulnerability;
Then he waited for
The enemy's
Vulnerability

Invulnerability rests
With self;
Vulnerability,
With the enemy

3. Thus the good fighter is able to secure himself against defeat, but cannot
make certain of defeating the enemy.
- There are "things within one's sphere of action" that one can take to secure himself. Training yourself, preparing yourself, understanding the markets.

The enemy is not weak, it is highly trained and you will be toast if you give the enemy an opportunity. This should also be true vice-versa.

4. Hence the saying: One may know how to conquer without being able to do it.
- "All I can know is whether my own strength is sufficient to defeat the enemy. I cannot cause the enemy to slacken and provide me with the opening necessary for victory."

5. Security against defeat implies defensive tactics; ability to defeat the
enemy means taking the offensive. (but being on the offensive makes one vulnerable to defeat)
- "If I have not been able to observe the enemy's dispositions and vulnerability, I can at least keep my own dispositions hidden; I can keep myself invulnerable and defend myself."

Stop loss anyone? Sitting duck stops? Keep mental stops to prevent being swept.

6. Standing on the defensive indicates insufficient strength; attacking, a superabundance
of strength.
- When you have insufficient strength, defend. When you have an abundance, then attack.

7. The general who is skilled in defense hides in the most secret recesses of
the earth; he who is skilled in attack flashes forth from the topmost heights
of heaven. Thus on the one hand we have ability to protect ourselves; on
the other, a victory that is complete.
- Know the terrain, take advantage of naturally occurring features. Know the weather, know different strategies and be able to implement them. Be nimble, flexible.

8. To see victory only when it is within the ken of the common herd is not
the acme of excellence.
- Ordinary victories take no skill.

9. Neither is it the acme of excellence if you fight and conquer and the whole
Empire says, "Well done!"
- Great victories that show skill, entails "subtle planning, secret movements, targeting the enemy's "mind" "; a victory without bloodshed.

The Way and Its Power, Chapter 22: ".... It is because he does not contend that no one Under Heaven can contend with him."

10. To lift an autumn hair is no sign of great strength; to see the sun and moon
is no sign of sharp sight; to hear the noise of thunder is no sign of a quick
ear.
- "These are ordinary attainments of the common man"

11. What the ancients called a clever fighter is one who not only wins, but
excels in winning with ease.
- The Way and Its Power, Chapter 63: "It tackles the hard in the easy, the great in the small. The difficult affairs of the empire are dealt with when they are easy, the great affairs of the empire are dealt with when they are small."


12. Hence his victories bring him neither reputation for wisdom nor credit for
courage.
-there is no rejoicing in victory. Victory is just something that should be done, failure is not an option.

13. He wins his battles by making no mistakes. Making no mistakes is what
establishes the certainty of victory, for it means conquering an enemy that
is already defeated.
-there are many ways to make mistakes, the way to victory is by making none of these mistakes

14. Hence the skillful fighter puts himself into a position which makes defeat
impossible, and does not miss the moment for defeating the enemy.
-how many times will the enemy slip up, or pretend to slip up?

15. Thus it is that in war the victorious strategist only seeks battle after the
victory has been won, whereas he who is destined to defeat first fights
and afterwards looks for victory.
-planning before action. Patience.

16. The consummate leader cultivates the moral law, and strictly adheres to
method and discipline; thus it is in his power to control success.
-rehash moral law aka the way, mindset. Do not forget past lessons as we move forward as a full grasp of the earlier concepts is vital. Remember to Review

17. In respect of military method, we have, firstly, Measurement; secondly,
Estimation of quantity; thirdly, Calculation; fourthly, Balancing of chances;
fifthly, Victory.
-in a specific order

18. Measurement owes its existence to Earth; Estimation of quantity to Measurement;
Calculation to Estimation of quantity; Balancing of chances to
Calculation; and Victory to Balancing of chances.
-follow specific steps: read the charts, execute the order, and then depending on the situation, use the MM strategy from your tool kit, suitable to the situation, according to the steps of that specific strategy

19. A victorious army opposed to a routed one, is as a pound’s weight placed
in the scale against a single grain.
-something about leverage maybe?

20. The onrush of a conquering force is like the bursting of pent-up waters
into a chasm a thousand fathoms deep.
- Be like water. Water flows downwards naturally, this line is about gravity (before it was named) and the laws of nature.

Chapter 5: Energy.

- book translation calls this chapter Potential Energy. I'd much rather have the book translations up here since it is what I am reading from, but that's okay.
"Cao Cao: In war, rely on the potential energy of the situation."
"Wang Xi: The Skillful Warrior, by relying on potential energy to obtain victory, never exhausts his own strength."
This chapter gets into some good stuff. Now we're learning.

Master Sun lived in the chaotic Warring States period. "They lived in a state of constant revolutionary expectancy... And so the slightest change could mean total change; and seizing the slightest sign of change was tantamount to seizing the opportunity of bringing about total change"


1. Sun Tzu said: The control of a large force is the same principle as the
control of a few men: it is merely a question of dividing up their numbers.
- this is a matter of organization and delegation of authority. Some of you might think that "okay, so I'll use the strategy that I am currently using on few orders, small position sizes, few currency pairs and crosses, and one account... and multiply that into more orders, larger position sizes, more currency pairs and crosses, and many accounts.."
Well, while I thought that at first... the only reason to have a large army is to win by force, or to win through intimidation. If victory is not won on the battlefield, but beforehand with careful planning, we should be able to win with just a small force, controlled as if it was a large force, and use the energy of the markets to win.

but, back in line with the text:
$1 out of $100 = $100 out of $10,000 , percentage-wise.
Why would I be okay to lose $100 on a $10,000 account, when that is tantamount to blowing up a $100 account?
And would I be okay to lose $1 on a $100 account, but scared to lose $100 on a $10,000?
It's about mindset.

2. Fighting with a large army under your command is nowise different from
fighting with a small one: it is merely a question of instituting signs and
signals.
- If you can't control a small army, then you can't control a large one. Oh, and vice-versa.

3. To ensure that your whole host may withstand the brunt of the enemy’s
attack and remain unshaken– this is effected by maneuvers direct and
indirect.
- Again, in Chapter 1 we saw that there was to be a dichotomy used throughout AOW.
There are all sorts of variations of combinations of direct and indirect tactics.
-> "any attack or other operation is "direct" on which the enemy has had his attention fixed; whereas that which is "indirect" takes him by surprise or comes from an unexpected quarter"
also, the enemy might come to see your "direct tactics as indirect and indirect tactics as direct", again, deception, surprise the enemy, fool him.

can be translated as:
orthodox/ unorthodox
regular/ irregular
straightforward/ surprise
overt/ covert

"Sometimes an excess of 'scheming' can cause one to blunder, whereas the total absence of 'scheming' is the supreme 'scheming'. If one is scheming against an enemy who is not scheming at all, one may end up the victim of one's own cleverness..."

Again, translated into the market environment::
1. This sudden rise in price, this is a breakout!
2. Oh shit, wait, is this a false breakout?
3. I'll fade this..
4. repeat steps 1-3 a few times
5.

4. That the impact of your army may be like a grindstone dashed against an
egg–this is effected by the science of weak points and strong.
- "Attack that which is weakest with that which is strongest"

My father has told me this story where two people each have 3 race horses, one strong, one medium, and one weak.

When the opponent sends out his strongest horse first, send out your weakest one.

You will take 1 loss, but your other two horses will win against his other two horses.

Your Strong> His Medium

Your Medium> His Weak


5. In all fighting, the direct method may be used for joining battle, but indirect
methods will be needed in order to secure victory.
- direct method: put in order, set stop loss, set take price. leave until one of them is hit. is that direct enough?

the indirect method.... is something more than just the direct method, something I am not fit to teach.

6. Indirect tactics, efficiently applied, are inexhaustible as Heaven and Earth,
unending as the flow of rivers and streams; like the sun and moon, they
end but to begin anew; like the four seasons, they pass away to return
once more.
- many possible combinations, unending as the flow of rivers and streams: "infinitely flexible and mobile"
sun and moon waxing and waning? see: Chapter 1, #6: Heaven signifies night and day, cold and heat, times and seasons.


7. There are not more than five musical notes, yet the combinations of these
five give rise to more melodies than can ever be heard.
- do re mi fa so la ti do? I think I count seven, but 5 is an auspicious number. see: 5 elements, 5 fingers (2 hands).

8. There are not more than five primary colors (blue, yellow, red, white, and
black), yet in combination they produce more hues than can ever been
seen.
- again, I have had art class and the primary colors are RYB and... lets not get OT here.

9. There are not more than five cardinal tastes (sour, acrid, salt, sweet, bitter),
yet combinations of them yield more flavors than can ever be tasted.
- Sweet, sour, salty, bitter, and Umami: all which can be combined to yield the taste of shit
just kidding. you get the idea.
http://en.wikipedia.org/wiki/Umami
Li Quan (author of various works on warfare): "This is the art of the chef"

10. In battle, there are not more than two methods of attack–the direct and
the indirect; yet these two in combination give rise to an endless series of
maneuvers.
11. The direct and the indirect lead on to each other in turn. It is like moving
in a circle–you never come to an end. Who can exhaust the possibilities of
their combination?
- yin and yang.

"breaking that circle means defeat"

12. The onset of troops is like the rush of a torrent which will even roll stones
along in its course.

13. The quality of decision is like the well-timed swoop of a falcon which
enables it to strike and destroy its victim.

14. Therefore the good fighter will be terrible in his onset, and prompt in his
decision.

15. Energy may be likened to the bending of a crossbow; decision, to the releasing
of a trigger.

16. Amid the turmoil and tumult of battle, there may be seeming disorder
and yet no real disorder at all; amid confusion and chaos, your array may
be without head or tail, yet it will be proof against defeat.

17. Simulated disorder postulates perfect discipline, simulated fear postulates
courage; simulated weakness postulates strength.

18. Hiding order beneath the cloak of disorder is simply a question of subdivision;
concealing courage under a show of timidity presupposes a fund
of latent energy; masking strength with weakness is to be effected by tactical
dispositions.

19. Thus one who is skillful at keeping the enemy on the move maintains deceitful
appearances, according to which the enemy will act. He sacrifices
something, that the enemy may snatch at it.

20. By holding out baits, he keeps him on the march; then with a body of
picked men he lies in wait for him.

21. The clever combatant looks to the effect of combined energy, and does not
require too much from individuals. Hence his ability to pick out the right
men and utilize combined energy.

22. When he utilizes combined energy, his fighting men become as it were
like unto rolling logs or stones. For it is the nature of a log or stone to
remain motionless on level ground, and to move when on a slope; if fourcornered,
to come to a standstill, but if round-shaped, to go rolling down.

23. Thus the energy developed by good fighting men is as the momentum
of a round stone rolled down a mountain thousands of feet in height. So
much on the subject of energy.
- use the force of the market to win money. breakouts, the speed of the moves, ever see a rubber band snap-back?

Coming to this chapter I feel like many reading AOW on its own will come to an understanding on their own of how to relate it to the markets.

Sorry, tired here.

A sudden thought about Chap. 4, Tactical dispositions:
- Opposing armies would try and figure out the disposition of the other army. "Being secret brings the victory; being transparent, defeat."
When battles were fought, finding out how many ships, guns, men, etc. the other army had, and what condition they were in and how far away etc. was of utmost importance to deciding how to fight and whether or not victory was possible.

In the market, there are many clues as to the 'disposition' of the market, but how many actually look to search for the answers?
I am talking about Time Frames here. Daily chart shows very bearish signs, so that's a given, if we only looked at this one time frame I would sell.
But scrolling down to the 4H and 1H, both are upward trending. 15 minute chart shows horizontal movement.

While this might seem like the most elementary of lessons, multiple time frame analysis, it's especially important to Trade Within Your Time Frame, if you're trading the bullish signals of a 1H chart, don't leave the trade so long that it melds with the bearishness of the Daily trend. Also, if you're in a longer time frame trade, don't let a shorter time frame showing a different trend second guess you.

The markets will trick you, but the answers are written there you just have to learn how to read a bare chart.

From this point on I think I will only post points on things that I find are more interesting in each chapter, or just to clarify.


Chapter 6: Weak Points and Strong

1. Sun Tzu said: Whoever is first in the field and awaits the coming of the

enemy, will be fresh for the fight; whoever is second in the field and has
to hasten to battle will arrive exhausted.
- "Jia Lin: He occupies a winning position and waits for the enemy. He is well prepared. His men and horses are relaxed and fresh."
Waiting requires patience, wait at a strategic position when placing orders. Be prepared.


2. Therefore the clever combatant imposes his will on the enemy, but does

not allow the enemy’s will to be imposed on him.


3. By holding out advantages to him, he can cause the enemy to approach

of his own accord; or, by inflicting damage, he can make it impossible for

the enemy to draw near.

4. If the enemy is taking his ease, he can harass him; if well supplied with
food, he can starve him out; if quietly encamped, he can force him to
move.

5. Appear at points which the enemy must hasten to defend; march swiftly
to places where you are not expected.

- "See the 2nd of the Thirty-six Stratagems, Attacking Wei to save Zhao."
The city of Handan, capital of Zhao, was under attack by the army of Wei.
Sun Bin, working for the state of Qi, ally of Zhao, decided not to send troops to Zhao to save them.
Instead, troops were sent to attack Wei, forcing the Wei army to retreat from Zhao.


6. An army may march great distances without distress, if it marches through
country where the enemy is not.

7. You can be sure of succeeding in your attacks if you only attack places
which are undefended.You can ensure the safety of your defense if you
only hold positions that cannot be attacked.

8. Hence that general is skillful in attack whose opponent does not know
what to defend; and he is skillful in defense whose opponent does not
know what to attack.
- "Giles: An aphormism which puts the whole art of war into a nutshell."


9. O divine art of subtlety and secrecy! Through you we learn to be invisible,
through you inaudible; and hence we can hold the enemy’s fate in our
hands.

10. You may advance and be absolutely irresistible, if you make for the
enemy’s weak points; you may retire and be safe from pursuit if your
movements are more rapid than those of the enemy.
- Translator: Like Cook Ding, in The Book of Master Zhuang, Chapter 3, "The Secret of Caring for Life": "What I care about is the Way, which is more advanced than mere skill. When I First began cutting up oxen, what I saw was the whole ox. After three years I no longer saw the whole ox. And now- now I approach it with my spirit and don't see it with my eyes. My senses have stopped, and my spirit moves at will. I follow the patterns of nature, I strike in the big hollows, I glide my knife through the big joints, and go with the nature of the ox..."

This is what the "Way" is, it is about being so in tune with the task at hand (I think). Some might say 10,000 hours of practice are needed for a chess master to see 10 steps ahead, or for a firefighter to realize that something is wrong about a burning house and evacuate the squad from the premises. But trading, too, with enough practice and experience, will lead to new insights and skills (I believe).

11. If we wish to fight, the enemy can be forced to an engagement even
though he be sheltered behind a high rampart and a deep ditch. All we
need do is attack some other place that he will be obliged to relieve.

12. If we do not wish to fight, we can prevent the enemy from engaging us
even though the lines of our encampment be merely traced out on the
ground. All we need do is to throw something odd and unaccountable in
his way.
- "timely use of "bluff""

13. By discovering the enemy’s dispositions and remaining invisible ourselves,
we can keep our forces concentrated, while the enemy’s must be divided.

14. We can form a single united body, while the enemy must split up into
fractions. Hence there will be a whole pitted against separate parts of a
whole, which means that we shall be many to the enemy’s few.

15. And if we are able thus to attack an inferior force with a superior one, our
opponents will be in dire straits.

16. The spot where we intend to fight must not be made known; for then the
enemy will have to prepare against a possible attack at several different
points; and his forces being thus distributed in many directions, the numbers
we shall have to face at any given point will be proportionately few.

17. For should the enemy strengthen his van, he will weaken his rear; should
he strengthen his rear, he will weaken his van; should he strengthen his
left, he will weaken his right; should he strengthen his right, he will weaken
his left. If he sends reinforcements everywhere, he will everywhere
be weak.

18. Numerical weakness comes from having to prepare against possible attacks;
numerical strength, from compelling our adversary to make these
preparations against us.

19. Knowing the place and the time of the coming battle, we may concentrate
from the greatest distances in order to fight.

20. But if neither time nor place be known, then the left wing will be impotent
to succor the right, the right equally impotent to succor the left, the van
unable to relieve the rear, or the rear to support the van. How much more
so if the furthest portions of the army are anything under a hundred LI
apart, and even the nearest are separated by several LI!

21. Though according to my estimate the soldiers of Yueh exceed our own in
number, that shall advantage them nothing in the matter of victory. I say
then that victory can be achieved.

22. Though the enemy be stronger in numbers, we may prevent him from
fighting. Scheme so as to discover his plans and the likelihood of their
success.

23. Rouse him, and learn the principle of his activity or inactivity. Force him
to reveal himself, so as to find out his vulnerable spots.

24. Carefully compare the opposing army with your own, so that you may
know where strength is superabundant and where it is deficient.

25. In making tactical dispositions, the highest pitch you can attain is to conceal
them; conceal your dispositions, and you will be safe from the prying
of the subtlest spies, from the machinations of the wisest brains.

26. How victory may be produced for them out of the enemy’s own tactics–
that is what the multitude cannot comprehend.

27. All men can see the tactics whereby I conquer, but what none can see is
the strategy out of which victory is evolved.

28. Do not repeat the tactics which have gained you one victory, but let your
methods be regulated by the infinite variety of circumstances.

29. Military tactics are like unto water; for water in its natural course runs
away from high places and hastens downwards.

30. So in war, the way is to avoid what is strong and to strike at what is weak.

31. Water shapes its course according to the nature of the ground over which
it flows; the soldier works out his victory in relation to the foe whom he
is facing.

32. Therefore, just as water retains no constant shape, so in warfare there are

no constant conditions.
33. He who can modify his tactics in relation to his opponent and thereby
succeed in winning, may be called a heaven-born captain.

34. The five elements (water, fire, wood, metal, earth) are not always equally
predominant; the four seasons make way for each other in turn. There are
short days and long; the moon has its periods of waning and waxing.

something my dad shared with me last night over dinner:

山不轉路轉，路不轉人轉，人不轉心轉.
mountain doesn't turn, road turns.
road doesn't turn, person turns.
person doesn't turn, heart turns.

Change begins within you.

Chapter 7: Maneuvering.
aka "the Fray" - Art of the Fray, Art of Managing Many, Mastery of Spirit, Mastery of Mind, Mastery of Strength, Mastery of Change.. this is The Art of War


1. Sun Tzu said: In war, the general receives his commands from the sovereign.
- in trading, You are both the general and the sovereign. you are the planner and the one who executes the plans. how well can you follow your strategy?

2. Having collected an army and concentrated his forces, he must blend and
harmonize the different elements thereof before pitching his camp.
- "there are old and well-established rules for the assembling of troops and the forming of an army, and for making camp"

3. After that, comes tactical maneuvering, than which there is nothing more
difficult. The difficulty of tactical maneuvering consists in turning the
devious into the direct, and misfortune into gain.
- scouting, skewing, attacking and rescuing (re-skewing?)
"misfortune into gain" averaging down

4. Thus, to take a long and circuitous route, after enticing the enemy out of
the way, and though starting after him, to contrive to reach the goal before
him, shows knowledge of the artifice of DEVIATION.
- make yourself seem far away to the enemy, then press forward with a hard march to fall upon them by surprise.
Ever see prices just sort of idling and then just explode? Did you have a chance to react?

5. Maneuvering with an army is advantageous; with an undisciplined multitude,
most dangerous.
The fray can bring Gain;
It can bring Danger.
- depending on the skill of the general

6. If you set a fully equipped army in march in order to snatch an advantage,
the chances are that you will be too late. On the other hand, to detach a
flying column for the purpose involves the sacrifice of its baggage and
stores.
- moving an entire army at once is time consuming. attacking with light troops (without their baggage) might mean losing the baggage that is left behind. pros and cons here.
putting in too large of a position size leaves no room for maneuvering. putting in too small of a position size = a too conservative approach.

7. Thus, if you order your men to roll up their buff-coats, and make forced
marches without halting day or night, covering double the usual distance
at a stretch, doing a hundred LI in order to wrest an advantage, the leaders
of all your three divisions will fall into the hands of the enemy.
- if the pair you are trading moves 100 pips on average (ATR, depending on your time frame), then a march of 30 pips for your troops might be normal. Maybe your troops can press on double for 60 pips. but to have them fight/ march even more, after a long march, will be detrimental. Just, be realistic about how much you wish to gain.

8. The stronger men will be in front, the jaded ones will fall behind, and on
this plan only one-tenth of your army will reach its destination.
- strong and weak position sizes, in relation to skewing.. when attacking, you will have stronger men in the front.

also, distance is important when it comes to adding troops and the size of troops so they all 'arrive' at the same time in relation to each other. sending out reinforcements too far away, and they will not reach the destination in time.

9. If you march fifty LI in order to outmaneuver the enemy, you will lose the
leader of your first division, and only half your force will reach the goal.

10. If you march thirty LI with the same object, two-thirds of your army will
arrive.
- it is harder to march further

11. We may take it then that an army without its baggage-train is lost; without
provisions it is lost; without bases of supply it is lost.
- remember what it takes to keep an army supplied (upkeep)

12. We cannot enter into alliances until we are acquainted with the designs of
our neighbors.
- know the pairs that you are trading and how they act in relationship to each other. EURUSD moves similar to GBPUSD but opposite of USDCHF

13. We are not fit to lead an army on the march unless we are familiar with the
face of the country–its mountains and forests, its pitfalls and precipices,
its marshes and swamps.
- know the market, know patterns, get used to reading charts.

14. We shall be unable to turn natural advantage to account unless we make
use of local guides.
- natural advantage, I am assuming, over the enemy. from fighting at a disadvantage as a new trader (loss), to fighting a fair fight (break even), to fighting at an advantage (profits), this is my goal.

15. In war, practice dissimulation, and you will succeed.
- war is based on deception. this is one for the big players. remember, scheme too much and you will be the one left the fool.

16. Whether to concentrate or to divide your troops, must be decided by circumstances.
- be adaptable to changing environments, gain experience in dealing with circumstances.

17. Let your rapidity be that of the wind, your compactness that of the forest.
18. In raiding and plundering be like fire, is immovability like a mountain.
19. Let your plans be dark and impenetrable as night, and when you move,
fall like a thunderbolt.
- so cool.

20. When you plunder a countryside, let the spoil be divided amongst your
men; when you capture new territory, cut it up into allotments for the
benefit of the soldiery.
- secure your gains from the enemy and use them to your advantage (again, rehash)

21. Ponder and deliberate before you make a move.
22. He will conquer who has learnt the artifice of deviation. Such is the art of
maneuvering.
*Art of the Fray. Break time.

Inserted Video

#23-37 will be discussed in my next post.

great post.

first time to see AOW related to trading. well thought.

Thanks, first time? Haha this is my second. Wasn't my idea.. Look around you'll find the source.

Yeah, you mean to say this information and the system that follows might not be suitable to people new to trading.
I agree, It's fairly high-level stuff. Might take your head off if not carefullll.

Actually, on second thought, I think I'm keeping this information fairly simple, just relating it to AOW is a bit different. I've read some books, done some research, put my time in the markets. Anything on here leading people astray? I'll correct it. Thanks.

common wisdom works everywhere. cannot believe my ancestor wrote it on bamboos thousands of years ago, but i couldn't wield the power of it.

to improve my trading, i have to improve myself.

Chapter 7: Maneuvering. (cont.)



23. The Book of Army Management says: On the field of battle, the spoken
word does not carry far enough: hence the institution of gongs and

drums. Nor can ordinary objects be seen clearly enough: hence the institution
of banners and flags.
- bull flags bear flags? hah just kidding, sorta. Just like soldiers in the army must learn how to read what is being signaled through gongs, drums, banners, and flags.. The market shows signs too, learn to spot them.

24. Gongs and drums, banners and flags, are means whereby the ears and
eyes of the host may be focused on one particular point.
- rehash earlier statement of "fighting with many is the same as fighting with few."

25. The host thus forming a single united body, is it impossible either for the
brave to advance alone, or for the cowardly to retreat alone. This is the art
of handling large masses of men.
- following orders.


26. In night-fighting, then, make much use of signal-fires and drums, and in
fighting by day, of flags and banners, as a means of influencing the ears
and eyes of your army.
- different signals


27. A whole army may be robbed of its spirit; a commander-in-chief may be
robbed of his presence of mind.
- fatigue, trading for long hours will weaken your mind. battle is done on the field but the mind can also be attacked. so, strengthen your mind with practice and preparation.

28. Now a soldier’s spirit is keenest in the morning; by noonday it has begun
to flag; and in the evening, his mind is bent only on returning to camp.


29. A clever general, therefore, avoids an army when its spirit is keen, but
attacks it when it is sluggish and inclined to return. This is the art of
studying moods.

30. Disciplined and calm, to await the appearance of disorder and hubbub
amongst the enemy:–this is the art of retaining self-possession.

31. To be near the goal while the enemy is still far from it, to wait at ease
while the enemy is toiling and struggling, to be well-fed while the enemy
is famished:–this is the art of husbanding one’s strength.

32. To refrain from intercepting an enemy whose banners are in perfect order,
to refrain from attacking an army drawn up in calm and confident array:–
this is the art of studying circumstances.

33. It is a military axiom not to advance uphill against the enemy, nor to oppose
him when he comes downhill.
- learn to read the terrain

34. Do not pursue an enemy who simulates flight; do not attack soldiers whose
temper is keen.
-chasing after price, might get ambushed

35. Do not swallow bait offered by the enemy. Do not interfere with an army
that is returning home.
- "Meng: When men are thinking of going home, they will fight to the death, and no one will be able to stand in their way"

36. When you surround an army, leave an outlet free. Do not press a desperate
foe too hard.
- he will fight to the death, allow room for the enemy to surrender.
"Wild beasts when at bay will fight desperately. How much more true is this of men?"
The fight or flight instinct- well, if you don't leave room for flight, then all that's left is fight.


37. Such is the Art of War.

Moving along quick to Chap. 8, this is a short but really important chapter.

I will agree, I am not able to relate every single sentence from AOW to trading, some of it is more of just knowledge to improve commonsense (can I say that?), anyways, trying too hard to relate some things here that are unrelated to trading, to trading, will seem like a stretch, or just sound weak at best. so I will refrain.


This chapter is important because it really hones in on having the right mindset, which is what I stated that the thread would be for in my first post. Doubtful at first to improve my own mindset... I decided, why not? Just give it a try. Anyways,


Chapter 8: Variations in Tactics.

- aka "The Nine Changes"

"Wang Xi: Nine simply stands for a large number. In war, there are infinite variations"

The nine changes are listed in #2 + #3 below. The tenth, "there are commands of the sovereign which must not be obeyed", is an observation which can be applied to all nine changes.


1. Sun Tzu said: In war, the general receives his commands from the sovereign,

collects his army and concentrates his forces.

-rehash chapter 7.
someone thinks that "the uncharacteristic brevity of this chapter would suggest some substantial textual problem"


2. When in difficult country, do not encamp. In country where high roads

intersect, join hands with your allies. Do not linger in dangerously isolated

positions. In hemmed-in situations, you must resort to stratagem. In

desperate position, you must fight.


3. There are roads which must not be followed, armies which must be not

attacked, towns which must not be besieged, positions which must not be

contested, commands of the sovereign which must not be obeyed.
- pick and choose your battles. is it worth the trouble or the gain?
"commands of the sovereign which must not be obeyed.." So true... ever do some dumb shit? I have, and no one was forcing me.

Master Weiliao said, "War is an instrument of ill omen. Combat is contrary to virtue. Generals are officers of death. They know neither Heaven nor Earth, they respect neither enemy nor their own lord."


4. The general who thoroughly understands the advantages that accompany

variation of tactics knows how to handle his troops.
"Jia Lin: He relies on the dynamic of the opportunity.. adapts.. follows prospect of gain and lets gain decide... not a stickler for precedent... enjoy the gains of total flexibility."


5. The general who does not understand these, may be well acquainted with

the configuration of the country, yet he will not be able to turn his knowledge
to practical account.

- 9 changes is about adapting to the environment. If you know the environment but not how to adapt to it.. then you will not enjoy the gains.


6. So, the student of war who is unversed in the art of war of varying his

plans, even though he be acquainted with the Five Advantages, will fail
to make the best use of his men.
-Giles: we see the uselessness of having an eye for weaknesses in the enemy's armor without being clever enough to recast one's plans on the spur of the moment.


7. Hence in the wise leader’s plans, considerations of advantage and of disadvantage
will be blended together.
- Cao Cao: In a gain situation, he ponders harm; in a disadvantageous situation, he ponders advantage.


8. If our expectation of advantage be tempered in this way, we may succeed
in accomplishing the essential part of our schemes.

- Hope for the best, be prepared for the worst. something my parents once told me.


9. If, on the other hand, in the midst of difficulties we are always ready to
seize an advantage, we may extricate ourselves from misfortune.
- He Yanxi: Gain and harm give rise to each other. The enlightened constantly reflect on this.

Dichotomy again.


10. Reduce the hostile chiefs by inflicting damage on them; and make trouble
for them, and keep them constantly engaged; hold out specious allurements,

and make them rush to any given point.
- fill the enemy's head with thoughts of Gain, make the enemy forget about the 9 Changes, make them forget about possible Harm.
when trading, are your thoughts constantly on Gain, will you remember to adapt to a change in the trend, do you forget about possible harms?


11. The art of war teaches us to rely not on the likelihood of the enemy’s not

coming, but on our own readiness to receive him; not on the chance of

his not attacking, but rather on the fact that we have made our position

unassailable.
-It is not about what the market does, (the market might do anything), it is about how well you are prepared to react.


12. There are five dangerous faults which may affect a general:
(a) Recklessness, which leads to destruction;
(b) cowardice, which leads to capture;
(c) a hasty temper, which can be provoked by insults;
(d) a delicacy of honor which is sensitive to shame;
(e) over-solicitude for his men, which exposes him to worry and trouble.

- HIGHLIGHT, DRAW A STAR, PRINTOUT and FRAME lol.
(a) Cao Cao: Bravery without forethought.
(b) Translator: Cowardice: literally, the desire to get out alive at all costs.
He Yanxi: ...will be prone to hesitation...which is a great calamity.
Ancient Duke: By letting slip [an opportunity for] gain, he faces disaster.
(c) Du You: An angry, impulsive man is easily provoked and sent to his death. His anger prevents him from seeing the difficulties.
(d) Giles: ...not be taken to mean that a sense of honor is really a defect in a general. What Master Sun condemns is rather an exaggerated sensitiveness...
(e) Giles: Master Sun does not mean that the general is to be careless of the welfare of his troops. All he wishes to emphasize is the danger of sacrificing any important military advantage to the immediate comfort of his men.

I have nothing personal to add to this.. Still a student on this.. Still working especially on (a) and (c).


13. These are the five besetting sins of a general, ruinous to the conduct of
war.

14. When an army is overthrown and its leader slain, the cause will surely
be found among these five dangerous faults. Let them be a subject of
meditation.
- Unless you are a computer, you will have to deal with your emotions at one point or another. Best learn to deal with them before, instead of after a situation arises.

Recap- Chap. 8: Variations in Tactics.


Additional information/ thoughts.


2. When in difficult country, do not encamp. In country where high roads

intersect, join hands with your allies. Do not linger in dangerously isolated

positions. In hemmed-in situations, you must resort to stratagem. In

desperate position, you must fight.

- Difficult country to me, is when price is stalling. Are the markets not moving? Please don't put in an order at this time and camp there. However, if you already have a direction, then that is good! hopefully your direction will lead you out of the marshes/ desert.

3. There are roads which must not be followed, armies which must be not

attacked, towns which must not be besieged, positions which must not be

contested, commands of the sovereign which must not be obeyed.
- again, I've talked about towns before, I see towns as where price is consolidating. Just as a town is closed within walls (back in the day), consolidating prices (where markets are idling) are trapped between the short spaces of support and resistance.

on a graph, consolidating prices would look just like a side-view of a town from afar, the candlesticks being the buildings, no skyscrapers, just short buildings. and like a small town, there is a lot of gossip (maybe) and not much general hubbub.

anyways.. don't trade middle of the move rally-base-rallies... hope to catch that drop-base-rally / rally-base-drop.

I'm surprised that all throughout reading AOW, I haven't once yet related it to my experiences in the Air Force. Reading this chapter, however, has brought up some memories. I'm very thankful for the highest ranking officer at my base, a Colonel, for looking out for me during my time serving. He once told me how to approach problems in life... he said: "Face the problem. Deal with the problem. Put down the problem." He told me this because as the highest ranking officer on base, he knew the names of all the hundreds of officers and soldiers there, and he knew their problems. If someone got a DUI, if someone was late for duty, if someone was sneaking in unauthorized smartphones.. he would know. So aside from his own duties and paperwork, he had to deal with a myriad of other things. So in trading too, to do your job right, you must find a way to deal with your other problems, and then not let them interfere with your trading.

This next chapter, The Army On the March, is a chapter on recognizing signs that give insight to the behavior of the enemy. In trading too, there are signs to look for which will say loads about what the market might be up to. I will not go into much detail about this because there are other threads that teach you how to read price. Personally, I feel that understanding the concepts behind why prices (the candlesticks) act (look) a certain way before continuing a trend or reversing, is of utmost importance to me in understanding the markets. While I attribute this to my curiosity to learn and my hopes to exceed, this might also say much about my fear that I'm afraid that I don't know enough about the markets to successfully invest. It is good to have this knowledge but when it comes to investing, it comes down to how you are able to react and act right there on the spot. You can't have too much cluttering your mind.

This is just like how different technical indicators will give you different signals on the market, and too many of them will clutter your charts. There are traders out there that want to delve deeper into the foundation of the markets, maybe just rely on reading price, and there are traders who are fine with just relying on technical indicators. This is just personality, if you find a way (system) that is interesting to you, of course you will want to learn more about it. You will reject systems that are not appealing to you, and welcome ideas that further your views on viable systems. I for one, cannot imagine spending a lifetime learning about the use of technical indicators.. But, there are many ways to trade, no one can force you to use a certain method...


Presenting to you all, in its bare form...

Chapter 9: The Army On the March.


1. Sun Tzu said: We come now to the question of encamping the army, and

observing signs of the enemy. Pass quickly over mountains, and keep in

the neighborhood of valleys.

2. Camp in high places, facing the sun. Do not climb heights in order to
fight. So much for mountain warfare.

3. After crossing a river, you should get far away from it.


4. When an invading force crosses a river in its onward march, do not advance
to meet it in mid-stream. It will be best to let half the army get
across, and then deliver your attack.

5. If you are anxious to fight, you should not go to meet the invader near a
river which he has to cross.

6. Moor your craft higher up than the enemy, and facing the sun. Do not
move up-stream to meet the enemy. So much for river warfare.

7. In crossing salt-marshes, your sole concern should be to get over them
quickly, without any delay.

8. If forced to fight in a salt-marsh, you should have water and grass near
you, and get your back to a clump of trees. So much for operations in
salt-marches.

9. In dry, level country, take up an easily accessible position with rising
ground to your right and on your rear, so that the danger may be in front,
and safety lie behind. So much for campaigning in flat country.

10. These are the four useful branches of military knowledge which enabled
the Yellow Emperor to vanquish four several sovereigns.

11. All armies prefer high ground to low and sunny places to dark.

12. If you are careful of your men, and camp on hard ground, the army will
be free from disease of every kind, and this will spell victory.

13. When you come to a hill or a bank, occupy the sunny side, with the slope
on your right rear. Thus you will at once act for the benefit of your soldiers
and utilize the natural advantages of the ground.

14. When, in consequence of heavy rains up-country, a river which you wish
to ford is swollen and flecked with foam, you must wait until it subsides.

15. Country in which there are precipitous cliffs with torrents running between,
deep natural hollows, confined places, tangled thickets, quagmires
and crevasses, should be left with all possible speed and not approached.

16. While we keep away from such places, we should get the enemy to approach
them; while we face them, we should let the enemy have them on
his rear.

17. If in the neighborhood of your camp there should be any hilly country,
ponds surrounded by aquatic grass, hollow basins filled with reeds, or
woods with thick undergrowth, they must be carefully routed out and
searched; for these are places where men in ambush or insidious spies are
likely to be lurking.

18. When the enemy is close at hand and remains quiet, he is relying on the
natural strength of his position.

19. When he keeps aloof and tries to provoke a battle, he is anxious for the
other side to advance.

20. If his place of encampment is easy of access, he is tendering a bait.

21. Movement amongst the trees of a forest shows that the enemy is advancing.
The appearance of a number of screens in the midst of thick grass
means that the enemy wants to make us suspicious.

22. The rising of birds in their flight is the sign of an ambuscade. Startled
beasts indicate that a sudden attack is coming.

23. When there is dust rising in a high column, it is the sign of chariots advancing;
when the dust is low, but spread over a wide area, it betokens
the approach of infantry. When it branches out in different directions, it
shows that parties have been sent to collect firewood. A few clouds of
dust moving to and fro signify that the army is encamping.

24. Humble words and increased preparations are signs that the enemy is
about to advance. Violent language and driving forward as if to the attack
are signs that he will retreat.

25. When the light chariots come out first and take up a position on the wings,
it is a sign that the enemy is forming for battle.

26. Peace proposals unaccompanied by a sworn covenant indicate a plot.

27. When there is much running about and the soldiers fall into rank, it means
that the critical moment has come.

28. When some are seen advancing and some retreating, it is a lure.

29. When the soldiers stand leaning on their spears, they are faint from want
of food.

30. If those who are sent to draw water begin by drinking themselves, the
army is suffering from thirst.

31. If the enemy sees an advantage to be gained and makes no effort to secure
it, the soldiers are exhausted.

32. If birds gather on any spot, it is unoccupied. Clamor by night betokens
nervousness.

33. If there is disturbance in the camp, the general’s authority is weak. If the
banners and flags are shifted about, sedition is afoot. If the officers are
angry, it means that the men are weary.

34. When an army feeds its horses with grain and kills its cattle for food,
and when the men do not hang their cooking-pots over the camp-fires,
showing that they will not return to their tents, you may know that they
are determined to fight to the death.

35. The sight of men whispering together in small knots or speaking in subdued
tones points to disaffection amongst the rank and file.

36. Too frequent rewards signify that the enemy is at the end of his resources;
too many punishments betray a condition of dire distress.

37. To begin by bluster, but afterwards to take fright at the enemy’s numbers,
shows a supreme lack of intelligence.

38. When envoys are sent with compliments in their mouths, it is a sign that
the enemy wishes for a truce.

39. If the enemy’s troops march up angrily and remain facing ours for a long
time without either joining battle or taking themselves off again, the situation
is one that demands great vigilance and circumspection.

40. If our troops are no more in number than the enemy, that is amply sufficient;
it only means that no direct attack can be made. What we can do is
simply to concentrate all our available strength, keep a close watch on the
enemy, and obtain reinforcements.

41. He who exercises no forethought but makes light of his opponents is sure
to be captured by them.

42. If soldiers are punished before they have grown attached to you, they
will not prove submissive; and, unless submissive, then will be practically
useless. If, when the soldiers have become attached to you, punishments
are not enforced, they will still be useless.

43. Therefore soldiers must be treated in the first instance with humanity, but
kept under control by means of iron discipline. This is a certain road to
victory.

44. If in training soldiers commands are habitually enforced, the army will be
well-disciplined; if not, its discipline will be bad.

45. If a general shows confidence in his men but always insists on his orders
being obeyed, the gain will be mutual.

I love it! Honestly, I was thinking of naming my trading method that i am making and learning 'surfing the market!'

Thats why i have the user avatar i have, because it reminds of the waves

Really jealous, you should go surfing more lolz..... Ive never had the chance to, for some reason I imagine it is going to be awesome when i have the chance.

Btw. YES! There is a feeling of riding the ups and downs like a pro, you just have to get into a certain sort of mentality. Then, atleast for me, my skill develops quicker this way. Thats also why I like trading eurusd 100 tick charts (u might want to give it a try).

ehh.. tick charts? sounds like ticks, leeching off of a host.. which is what most ppls mentality of brokers is.

but to be honest, if a customer is willing to 'donate' a certain amount of money to my company, then he/she should be prepared to lose/win money.

all in the game.

i'm sure i'll have more to share. sorta drunk right now lolz.

are u a girl?

lolz no! definitely no , not a girl. I just liked the picture (it relaxes me and reminds me of water and surfing)

anyways .... tick charts are quite fun. they have a lot of moves on them

tick chart for friday

oh but i am a young trader, under 30. started last january, and its been a roller coaster ride.