Zen-like Zones: The Big Myth of Trading Psychology

I have read so many trading books and they all seem to imply that a successful trader is someone who can reach some marvelous state of trading in some Zen-like zone. The trader sits there serenely in front of their trading screen and acts with unfettered decision making, like some Zen Master Samurai on the finance battlefield.
I have read so many trading books and they all seem to imply that a successful trader is someone who can reach some marvelous state of trading in some Zen-like zone. The trader sits there serenely in front of their trading screen and acts with unfettered decision making, like some Zen Master Samurai on the finance battlefield.

What utter garbage. There are many trading rooms around the world that are full of noise, with traders yelling at one another or yelling at the phone. Many trading rooms are as noisy as a school yard and the traders are anything but serene. It is not uncommon for traders to just lose it and reign their wrath down on the nearest piece of office equipment. Sure there are probably quite a few trading rooms out there that are like a library, but the fact of the matter is many traders are like a kid with ADHD and they produce the goods.

I think the problem is the whole Zen warrior psychology thing has been applied too literally to Trading. If you read the The Book of Five Rings, which is written by probably the most famous Samurai that ever lived, Musashi, you realise that this guy was a man with some serious issues who was pretty handy with a Katana (as well as a boat oar which he used to bludgeon a man to death). In today’s society he would be locked away in a maximum security penitentiary for a very long time. Musashi killed many many men and he only turned to Zen in later life when he retired from his blood thirsty ways. If you read Thomas Cleary’s The Japanese Art of War: Understanding the Culture of Strategy, you start to realise the real connection between Zen and the Samurai. The Zen Priests realised that in order to gain favour of Samurai rulers of their time, they twisted Zen to provide performance psychology support to the local Samurai. This is a long way from the peaceful roots of Buddhism and is certainly a world away from the dude who gave up everything to sit quietly under the Bodhi tree and contemplate the essence of human suffering. This is no different to the Catholic Church twisting Jesus’s teachings to support a Crusade to gain the favour of the local Patriarchs.

While I am on the topic of Samurai and trading, don’t waste your time on trying to read books which try to relate trading to ancient tactical manuals, such as Sun Tzu’s Art of War. These books just push the metaphor too far and don’t add anything to the field. You are better off not thinking of the market as the friend or your foe. It will just screw your trading up. If you have to think in metaphors, I prefer to think of trading in sailing metaphors. In sailing, the ocean and the wind are neither your friend nor your foe. There are times when you can go out and use the weather conditions to have a great sail and there are times when the conditions are poor and you are better off leaving your boat in the dock and go down the pub for a pint. Like sailing, trading is about entering trades when the conditions are good and staying out of the market when they are bad.

Rather than taking lessons from Zen monks, I think we can learn more from Perfomance Psychologists, who work with very non-Zen athletes who still deliver amazing record-breaking performances. If John McEnroe can win seven grand slam titles, I don’t see any reason why you need to be as peaceful as a Zen Bull to succeed in trading, although the world would probably be a much nicer place if we all spent some time sitting quietly under the Bodhi tree.

If you want to read more about performance psychology as it applies to trading, you should read Brett Steenbarger’s Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology.

Macrotactics is a blog devoted to recording a part time trader's journey into the world of trading currencies. In my day job I work as a manager in an Information Technology company. I live in sunny Queensland, Australia with my wife, a cat and a baby on the way. I have been banging my head on this trading thing for at least 3 years now and the deeper I dig into the topic of trading, the more I realise there is to learn. Trading for me has become... More