Teaching You to Trade Stocks 97: Traditional Chinese Medicine, Military Strategy, Poetry, and Trading 1

2008/1/29 15:49:06

In this world, there has never been a shortage of greed, and one of its greatest manifestations is God-like thinking. There is a God — you believe in Him, and everything becomes His problem, and you get both heaven and eternal life. This, in essence, is merely an illusion manufactured by human greed.

In the market, in trading, the greatest manifestation of this greed is the desire to find some predictive, once-and-for-all, God-like indicator or model that determines everything a priori, and then with this thing, one can enjoy heaven and eternal life with money rolling in endlessly.

What is this? Classic greedy thinking. Such people — even Buddha himself couldn't save them. They're ultimately destined to be frogs. And the market is full of such people. The lowest of them hope to find a magic crutch, preferably one that automatically generates all buy and sell signals, so they can do absolutely nothing while money rolls in.

The character for "greed" (贪) and "poverty" (贫) differ by just one stroke. With such greedy thoughts, not being slaughtered by the market would truly be a joke.

Trading in the market most closely resembles traditional Chinese medicine, military strategy, and poetry.

Studying Chinese medicine, you first need to understand its theories, systems, ways of thinking, classification principles, and so on. According to the Chinese medicine system, all diseases have a corresponding theoretical output that matches reality. This is just like this ID's theory — all market opportunities are output one-to-one by this ID's theory.

But merely knowing the outputs is completely useless. Learning a pile of theories is useless, because knowing theory and applying it depends on the person, and differences in people's qualities, skill levels, and so on lead to vastly different results in application. So ultimately, everything comes down to personal cultivation.

However, theoretical output is the most fundamental foundation. If you can't even get the theoretical classifications straight, then talking about application is laughable. So, first and foremost, you must thoroughly master the theory.

A Chinese medicine practitioner, after learning the theory, must then begin playing the game of "look, listen, ask, and feel the pulse" — this is equivalent to observing the real-time manifestation of market opportunities in this ID's theory. Some people always want to predict — well then, let me ask: a doctor knows that a patient will inevitably come next, but does he need to predict the patient's gender, disease, or what medication to prescribe? If there were such a doctor in the world, would you dare visit them?

Similarly, the arrival of market opportunities is just like that incoming patient. You don't need to predict anything about them — not price levels, not timing, nothing. You only need to "look, listen, ask, and feel the pulse" when they arrive. It's that simple — why can't this way of thinking click?

Opportunities will inevitably be output according to the theory's requirements. The second step is observing the manifestation of opportunities and examining them with "look, listen, ask, and feel the pulse" — this is a higher level of requirement. Just like a doctor who can skillfully perform examinations — that requires real skill, real ability developed through practice. So when you start out, you'll inevitably misjudge. That's perfectly normal. Keep watching, keep practicing — that's the only path.

Let me say it again: you must look at chart patterns. They are the world's most expensive paintings, the most expensive works of art. Keep looking — it's like cultivating your connoisseurship. Why do so many antique collectors keep getting fooled by fakes, while some people can specifically identify counterfeits? It's a matter of connoisseurship, but this requires tempering. Getting fooled a few times during the tempering process — isn't that the most normal thing?

Why are so many people miserable in the market? Because they don't love the price action. Price action is the finest artwork. Only when you stand from a perspective of love can you stimulate your connoisseurship. Otherwise, with your mind constantly occupied by greedy thoughts of profit and loss, how could your eyes not be blinded?

Once you've mastered "look, listen, ask, and feel the pulse," the hardest part comes next — the actual trading. Trading is like a Chinese medicine doctor writing a prescription. Being able to diagnose an illness is basically equivalent to 1/10 of Chinese medicine, while the difficulty of using medicines and writing prescriptions accounts for the remaining 9/10. And without that final prescription, everything that came before is wasted. Trading is exactly the same.

Writing a prescription is like deploying troops in a military formation — as the saying goes, "using medicine is like commanding an army." How to use them — this you can spend your entire life cultivating. Just like trading — trading is a lifelong endeavor, unless you leave the market.

Chinese medicine writes prescriptions differently depending on the person, the time, the place, and other factors — just like in warfare, where no two battles are ever the same. Chinese medicine is different from Western medicine. Western medicine treats people like machines — all people with the so-called same disease get the same medication, a complete assembly-line mechanized production. And many people's thinking about the market right now is exactly this kind of thinking.

Of course, within all these differences lies a common "invariant" foundation. For example, the "invariant" foundation of market movements is completely described by this ID's theory. Similarly, the "invariant" foundation of all medicine application is described by Chinese medicine theory. In other words, no matter how you toss things around, you can't escape this foundation. This is the sameness within difference, the invariance within change.

Understanding this point, trading then has a grand invariant backdrop, and upon this backdrop comes a process of creative manifestation. Each person, according to their own ability and cultivation, writes different prescriptions and produces different trading records. This is an endless process of continuous cultivation.

Specifically, at a general level, you must follow the principles of buy and sell points when trading. However, this is not absolute. For example, this ID often prefers to buy and sell at positions slightly offset from the buy and sell points. Why? Because doing so allows trading in larger quantities, or creating some special situations to achieve greater objectives.

This is like writing regulated verse poetry. When you start, you must strictly follow the tonal patterns. If you fail to follow them, that's a skill problem — don't ever comfort yourself by claiming you're writing "irregular-tone" poetry, as that will ruin you and forever bar you from true regulated verse. But when you have already become free within the tonal patterns and can handle them effortlessly, you may need to, based on the poem's content, set your own tonal rules to create extraordinary sonorities — the so-called "irregular-tone" poems. At that point, you've entered the realm of transcendent mastery. And trading is exactly the same.

Sorry, I wanted to write more, but some rascal called about a project matter. This rascal is too familiar to refuse, so I'll stop here for now and continue later.