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How important is winning to you?  There are individuals so determined to succeed that they are open to any new idea regardless of how controversial and outrageous it may appear to their peers. Others refuse to entertain ideas outside of their paradigm no matter how much it costs and how many goals go unrealized.

Thankfully, the road to success is paved by hundreds of people preceding us who make our journey easier.  Tony Robbins, Zig Ziglar and other motivational speakers all sell the precept:  “If you want to become successful, find a mentor who has had success in the field and copy what he has done.”  50 years from now, after I’m long gone, my grandchildren will be rummaging through my attic looking for treasures to hock for a speed boat.  Hidden behind the Pet Rock, the Chia Pet, the Ronco Popeil Pocket Fisherman and the Rubik's Cube will be a copy of Awaken the Giant Within.  I am ashamed to say that they likely won’t find Chaucer, Beowolf, or Catcher in the Rye.  Perhaps I will place a copy of Ulysses and Hamlet up there to throw them off. 

Why not choose a mentor who has stood the test of time?  Why not chose the original, not someone who takes other's ideas and repackages them into a slightly sexier and more contemporary box?  I am speaking of Buddha and Zen philosophy.  Please don't take this suggestion and mistake me for a wacko.  I am sure over the years I will give you many other reasons to come to that conclusion; besides, who are you going to trust—me or twelve psychologists? 

You may ask yourself, “What does Buddhism and Zen have to do with trading?”  Phil Jackson of the Chicago Bulls era dynasty was scoffed at by the team owners, fans and players with his bringing Zen and Buddhist principles to basketball until they won 6 NBA titles in 7 years.  These same teachings should not necessarily be construed as a “religious” outlook as they can bring success to both novice and professional traders. 

The following are some basic tenets of Zen and Buddhist teachings and how one could interpret them to profit in the stock, bond, commodity and currency markets. 

Teaching #1: “In the sky, there is no distinction of East and West; people create distinctions out of their own minds and then believe them to be true.”  ~ Buddha

Lesson: How many times were you convinced that your opinion was right even when the markets were proving to you that you were wrong?  The peculiar thing about people is that they often have more conviction in their beliefs than their goals.  The markets are neither right nor wrong; they just are.  When the market does something against what you believe should be happening, it is not the time to get stubborn, but rather to close out your trade and rethink what is going on. As Anais Nin once said: "We don't see things as they are... We see things as we are." 

Teaching #2: “What we think, we become.” ~ Buddha

Lesson: Sound like Tony Robbins, Zig Ziglar and James Allen's As a Man Thinketh?  If you are focusing on the negative consequences, somehow they come to be reality, much like focusing on the concrete center divider on the highway while driving somehow forces the car to veer towards it.  Focusing on success and believing that you can be a great trader are two of the most important elements of “trading psychology” and can propel you to new heights.  Remember to shoot for the moon, for even if you miss, you’ll be among the stars. Michelangelo said it best when he said: "I saw the angel in the marble and carved until I set him free." 

Teaching #3: “Ennui (boredom) has made more gamblers than avarice, more drunkards than thirst, and perhaps as many suicides as despair.”  ~ Buddha 

Lesson: Ask any professional trader when their most aggravating and biggest losses occurred and they will say it was when they got into a trade because they were bored or were lazy. While I can't speak for anyone else, I can definitely attest to this behavior from personal experience.  A focused mind is like a laser piercing through obstacles until it gets to the goal.  A bored or unfocused mind results in losses, frustration, and fails to accomplish goals, etc. 

Teaching #4:“The obstacle is the path.”  ~ Zen Proverb

Lesson: In terms of technical analysis, often that which is support (or resistance) is pierced and then there is no looking back from that price. Elliot Wave is an awesome tool by which one can put their best foot forward and try to make assumptions about what the market is going to do.  However, since so many people are now looking at key support and resistance numbers, once said numbers are broken, there is usually a lot of profit to be made by hopping on the new trend. 

In terms of trading psychology, when one finds themselves losing on trades in similar situations and sees the pattern, they found an obstacle to success.  Reversing what one would normally do in similar situations is often the key to success.

Teaching #5: “He is able who thinks he is able.”  Buddha

Lesson: If you think you can learn trading, complicated option strategies and to be successful, the odds are greatly in your favor of achieving the goals you set for yourself.  Ghandi illustrates this when he stated: "Men often become what they believe themselves to be.  If I believe I cannot do something, it makes me incapable of doing it. But when I believe I can, then I acquire the ability to do it even if I didn't have it in the beginning."   Yes, even Ghandi plagiarized Buddha.

Throughout history, almost every great leader, poet, winner and author has borrowed from Buddhist and Zen teachings because they offer kernels of wisdom that stand the test of time. The psychology and mental framework by which an individual approaches trading is just as important as their level of knowledge about the products they are trading.  Like a peak performance athlete, it is not only knowledge and physical ability that floor traders require to excel in their profession, but also a healthy mental approach.  That is not to say they are all sane by any stretch of the imagination, but all successful traders believe they will be placing a winning trade before they even enter into it.  Whether they know it or not, many of their mind's self-talk mimics that of Zen and Buddhist philosophy, and would be of benefit to anyone in the markets.

Plan your trade and trade your plan,

Scott Kramer
Staff Writer and Trading Strategist
Optionetics.com ~ Your Options Education Site
Visit Scott Kramer’s Forum 

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