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Trading and the Art of War


Take a moment to seriously consider the following question. When was the LAST time you were in a "fight" or "war"? Well? Did your imagination and memory take you back to junior high school when the school-yard bully bloodied your nose for talking to his girl? Perhaps you thought back to a long-forgotten push-shove incident at some tavern when you were in college. Or did you think of some military campaign you served in during a tour of duty in the Armed Services?

Interestingly, these typical "combative" recollections would likely come to the minds of most people contemplating my opening question. Even more interesting is the fact that such answers would be inaccurate! In all likelihood, your LAST fight was as recent as yesterday or today. Or it was possibly in the last few minutes! Surprised? You won't be if you expand the meaning of the words "fight" and "war" to their truest definitions!

Old Words- New Perspectives

"Fight" is derived from the Old English word feohtan, meaning "strife or struggle". "War" evolved from the French and German word werra, which also means "strife or struggle". Funk & Wagnall's dictionary defines both the words "fight" and "war" as meaning "to struggle in any manner; any act or state of conflict; any contest through which a victor is determined". In other words, this essentially describes many (if not most) of the events of our every day lives... especially futures and commodities trading! Trading is unquestionably a VERY REAL type of "warfare", complete with it's own unique dangers and fears, tactics and strategies, victories and defeats. For this reason, increasing numbers of traders want to learn more about the nature of "professional warriorship" through the writings, philosophies and insights of history's most accomplished warrior figure... the Japanese Samurai! But why would the Samurai, a long extinct historical figure, represent such a valuable resource and role model for contemporary trader? The reasons are numerous and possibly surprising.

Samurai & Traders: Kindred Spirits?

First, although the actual Samurai has passed into history along with the dissolution of Japan's feudal era and separation of classes, the Samurai "spirit" definitively lives on! This is the result of countless samurai family descendants that have dedicated themselves to preserving and teaching the original bujutsu (the Samurai's Art of War). Also contributing to this preservation was that the Samurai were also highly educated in the aesthetic disciplines of literature, art, poetry, and philosophy. Frequent writing of insights and experiences was both encouraged and practiced. The numerous manuscripts, scrolls and other writings left by these masters for future generations of "warriors", has produced the unique opportunity for contemporary martial disciplinarians (which should include traders) to "pick the brains" of some of history's most prolific martial philosophers... warriors who consistently demonstrated an ability to face daily risk and danger with stoic composure and calm! Certainly the same abilities that every trader needs and seeks to possess!

The second reason why Samurai insights and philosophies can be important and immediately helpful to a wide variety of traders is the amazing similarity between the various Ryu (family styles and lineage) of swordsmanship of their time and the many trading systems and philosophies of today. For example, the Shinkage Ryu Samurai concentrated on the "wave-like" patterns of motion of their opponents, "entering" their attack at the precise peak of such motions (Elliott Wave, Cycles?). The Nito Ryu Samurai believed in making sudden, decisively lethal attacks after prolonged "face-offs", taking advantage of their pponent's suki (defensive opening) caused by a momentary lapse in concentration, as indicated by the opponent's eyes (Contrarian trading?). The Togakure Ryu Samurai practiced an aiki (moving in harmony) principle through which they allowed their opponent to bring about their own demise. By allowing them to initiate the attack, the Togakure stylist then simply followed the attacker's lead, smoothly parried, and then lethally counter-attacked (Trend-Following?).

All of these various styles had their successes and failures, their strong points and their weak points. They all possessed the same potential for winning or losing... depending on the skill level, discipline and mentality of the individual warriors in battle! This brings me to the third, and most important parallel, a point upon which the legendary Samurai masters and traders would agree. The actual "system" practiced is not as important as the individual warrior's (trader's?) ability to implement their tactics and strategies with disciplined consistency and emotional control, even in the face of the most dire consequences of failure! This very important insight is reflected in many maxims of all three Samurai Ryu mentioned above: "Spirit and sword must be united as one!" (Shinkage Ryu); "The path of the technique is first cleared by the mind! (Nito Ryu); " Believe in your every move in mind, body and spirit! (Togakure Ryu). Thus, what all Samurai agreed upon regardless of there Ryu (and what most traders could benefit from, regardless of their trading system) was their shinjutsu and misogi (psychology of action and spirit-focusing)!

The Samurai A.C.T.I.O.N. Plan (TM)

In order to make shinjutsu and misogi easy to understand and apply, I have broken them down into a convenient psychological "blue-print" that I call the Samurai A.C.T.I.O.N. PlanȘ. The word A.C.T.I.O.N. is an acronym consisting of the first letters of the first key words of six essential Samurai maxims. This easy to remember summary of essential Samurai insights can provide invaluable tips for successful mental discipline and escalation of the warrior-spirit! Whether it be your emotions or your trades that are not up to par, reviewing the plan will help you spot your psychological/ spiritual weak points that need some work.

"ACCEPT... all possible losses before entering the battle!"

The Samurai's most formidable psychological trait was his willingness and readiness to forfeit his very life for the battle! Total acceptance of the possible negative outcome in any type of engagement empowers the warrior, and ultimately eliminates the consequential fear and self-doubt that would accompany a life-or-death confrontation. In trading there is undoubtedly a kind of life-or-death feel when you take a position that is potentially profitable but equally dangerous (risky). The first and foremost issue in trading (as in bujutsu) should be the absolute willingness and ability to "accept all possible losses" before entering the market!

"CENTER... yourself in mind, body and spirit!

Western culture and business seems to be essentially void of any understanding of the concept of human "synergy". Whether one is religious or not, the fact cannot be avoided that man consists of equal parts of mind, body and spirit. The Japanese word for spirit or "life-force" is Ki. The Samurai constantly sought to focus and harmonize Ki with mind, body and INTENT with literally every breath he took, a process referred to as misogi.

The art of breathing has been historically connected to spiritual power and strength by every culture known to man. Even the English word for breathing, respiration, means "to renew or take in spirit" according to it's Latin and Greek origins. Therefore, before a trading position is taken, the trader should practice misogi by breathing deeply into the pit of the stomach, or hara. By becoming intensely aware of the point three inches below the navel, the trader becomes "in tune" with the mental, physical and spiritual "center" of their being! This will aid in putting the total being (mind, body and spirit) and sakki (absolute intent to succeed) into the trade!

"TRUST... your inner-skills and warrior-intuition!"

The Samurai practiced their art or "system" incessantly in order to totally commit it to the unconscious "mind. Further, the principles and practice of Samurai swordsmanship and technical trading are essentially identical. Both teach the practitioner to read the evolving situation, what tactical action to take and when to take it! As mentioned before, this Samurai principle of seizing a tactical opportunity when it presents itself is referred to as suki. For consistent, profitable trading, it is essential that the trader totally trust both his "system" and his intuition and be ready and willing to initiate action the instant suki presents itself!

"IMAGINE... victory clearly in your mind's-eye!"

It has often been said that the imagination is the "guidance system" of our destiny. The Samurai would never have entered into battle first imagining his defeat. Nor should traders ever take a position while imagining the worst. One of the most important traits of mental discipline is the willingness and ability to direct the imagination to the greatest possible advantage! The Samurai called this principle sakki, which was believed to summon the warrior's psychical powers of mind-over-matter (and situations). And since the subconscious mind cannot distinguish between a real and imagined event, it only makes good sense (and probably higher profits) to imagine a profitable trade before taking action on a position! Using "positive outcome" imagery is as much of a habit as any of our other behavioral traits. It may take consistent, disciplined practice to master it, but once you do the benefits and rewards will be quite obvious!

"ONLY... exist in the present moment to conquer fear!"

If we could select the single most common nemesis to success in any endeavor it would have to be FEAR! It is fear (in it's many forms) that ultimately leads to over-analysis, self-doubt, hesitation and/or impulsiveness! The historic Samurai learned to overcome this human tendency through the practice of Zen, a psycho/spiritual discipline that advocates existing completely and totally "in the moment". Contemporary psychological research bears out the fact that 99% of all fearful states are either ANTICIPATORY or REFLECTIVE. In other words, it is the result of living in the past or in the future. There is rarely ever any debilitating fear when a person is concentrating exclusively on the present moment! Both I and my students have seen irrefutable proof of this as we face the Misogi fire-walk, one of the graduation exercises of my training program. We can only fear the fire if we think of how "we might get burned" or "how we got burned before". By only existing in the present moment of action we are able to avoid the fear of being burned by the coals OR by the trading positions we take!

"NEVER... ever stop, once you have begun!

Even after receiving a mortal injury, the Samurai were considered dangerously lethal until the moment they lay lifeless on the ground. This was due to the fact that, once the Samurai had initiated an attack, he would see it through to the end... even BEYOND breathing his last breath! They believed, as traders should, that any action (or position) worth taking to begin with was worth seeing through to it's final conclusion!

"Tentative" entry into a battle or into the markets can only lead to loss, destruction or demise. Once action was initiated, the Samurai did not believe in fakes, half-swings or tentative movements of his razor-sharp katana (sword). He only believed in his decision to act and in his right to victory over the opponent before him... and THAT is what made him a legend in his own time!

Warriorship & Trading: The Paths Of Discipline

ACCEPT all possible losses... CENTER your mind, body and spirit... TRUST your system and intuition... IMAGINE profits and success... ONLY exist in the moment of action... and, NEVER stop until you've seen your position through to completion. This simple plan represents the collective "action-oriented" wisdom of the Samurai warrior. Without a doubt, it offers the same value and potency to today's traders as it did for their warrior counterparts centuries ago. Beyond it's apparent simplicity is a great and powerful truth. And as with all wisdom, the plan requires study, honest introspection and fervent application! In short, it takes DISCIPLINE... the true path of both warriorship and successful trading!

In every field of endeavor, especially trading, there are those few men and women who, while mastering the mechanics of their system, intuitively sense there is something more than technique, something beyond the mere technical maneuvers others work so hard to perfect. These special people sense and reach for a level of mastery most ordinary technicians don't even know is possible. Through there own extraordinary insights and efforts, they move beyond technical mastery to touch the very soul of their craft. They perceive and merge with the very essence of what makes their calling "art". And it is they who will draw upon the insights and wisdom of history's most accomplished warrior-figure, the Samurai, and possibly elevate their trading to a new level of excellence, profitability and satisfaction... the kind of satisfaction only a "warrior" could ever appreciate or understand!

Dr. Richard McCall is the president of Misogi International, Inc. and the headmaster (Shihan) of the Bushinkai Dojo (Martial-Arts Training Hall) in Little Rock, Arkansas. An Occupational Psychologist, Samurai historian and master martial artist, Dr. McCall is the developer and presenter of the Misogi ChallengeȘ Executive Training Retreats, and lectures extensively on trading with Samurai warrior mentality (ShinJutsu). For more information regarding his lectures, seminars and retreats, or to receive a free desk-top mini-poster of the "Samurai A.C.T.I.O.N. PlanȘ", or a free audio cassette on "Trading & the Art Of War" call: Toll Free: 1(800)336-7061 (outside U.S. call 501/664-5540).

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