TaoWhat is the Tao of Trading? It is the way. Our indicators line up and we take a trade. The outcome is not important. If we are detached from the outcome, we can more easily do our job. What is our job? To implement strategies designed to generate profits.
1. In Taoism, the basic, eternal principle of the universe that transcends reality and is the source of being, non-being, and change.
2. In Confucianism, the right manner of human activity and virtuous conduct seen as stemming from universal criteria and ideals governing right, wrong, and other categories of existence.
Enter our Trend Models:
SPX_Daily Trend Model
We have seen this sucker before, it along with it's weekly counterpart, defines the dominant trend of the market.
SPX Weekly Trend Model
Such has been the nature of our summer. Our parenting unit, as represented by the above two SPX Trend Models, has been squabbling. One is Yin, the other Yang. Oh cruel fate......
Friday was a callous hoax. The SPX_240 minute went SHORT, but the market refused to follow-through on the downside and recovered nicely into the close:
SPX_240 Trend Model
Yet we had to take this trade. That is our way. The 240 minute model is our heads-up and head-start on what is usually a pending Daily reversal. But apparently not so in this case. What did we do wrong?
Such is the Tao of Trading. If you are looking for perfection, marry me. But as far as our trading strategies go, we are batting about .500, which means that half of our trades are like the one above, busted. It's the other half that provides our sustenance.
In an ironic twist of karma, taking losses are part of the winning trading paradigm:
In order to take wins, you have to take trades;
In order to take trades, you have to take losses.
Was it Yogi Berra who said, "Half of psychology is mental"? Well, at least half of trading is psychology and its never easy to take a losing trade in our accounts. But if successful trading was easy, everyone would be doing it.
The point that I made to my subscribers and which I am sharing here today is that successful implementation of a trading strategy isn't defined by taking profits alone, its defined by taking the trades that your system generates, all trades, regardless of the outcome.
The Tao of Trading.