The spirit and the art of war Sun Tzu style if applied in forex trading will result in a tremendous way of trading. As a ilustratasi in the use of strategy Sun Tzu, General as you, fighting as trading, troops as capital/your money.
IN TERMS OF UNDERSTANDING THE MARKET
1. "We are not fit to lead an army on the March unless we are familiar with the face of his country-the mountains and forests, cliffs and traps as well as swamps." (Sun Tzu).
Like what Warren Buffett puts it, "the risk of not knowing what you are doing. If you do not understand the market, you are not fit to invest in it. You will get your capital (your army) was wiped out "
2. "He who knows all this, and in fighting puts his knowledge into practice, will win the battle." (Sun Tzu).
Not good enough if we only know the theories and concepts behind the investment. A trader should be able to apply that knowledge correctly to gain profit from the market.
IN TERMS OF PSYCHOLOGY TRADER
"A general, who was unable to control his annoyance, will launch his men to attack like ants swarming, resulted in one third of his men died, while the city was still uncontrollably. Such is the ill effects of the siege. " (Sun Tzu)
Don't be emotionally affected by the market or harm. If traders are too eager to profit or revenge losses, traders can lose sanity and become irrational. The decisions are likely to be challenged and ended up with a loss. Such is the ill effects of impulsive trading
"There are five dangerous faults which may affect a General:
- faux pas, that leads to destruction,
- the coward, which leads to being caught,
- the hasty temperament, which can be triggered by contempt,
- the enjoyment of honor which is sensitive to shame,
- over-attention on the troops, who took him on concerns and issues.
Psychology is the key to the trader. If he can't control his emotions and his character, he will lose money in the market. If he's sloppy, he will make a desperate trading without taking into account the opportunities to win. If he is a coward, he never could win big enough to cover its losses. If he has a temperament that is hasty, he will try to take revenge on the market end up with bigger losses. If she prides itself on when he wins, he will be calm when he lost and he'll never learn from my mistakes. If he is over attention on the loss, he would always worry about and have never been able to make deals more with better.
IN TERMS OF MANAGEMENT OF MONEY
"Control of large armies/settings is the same principle as control over some people, it is about the Division of their numbers." (Sun Tzu)
Trading big capital is the same is the case with small capital trading. You should not be affected by the absolute figures of losses and gains when trading. Follow the normal rules and systems and share capital according to the lot and the right position.
IN TERMS OF MOVING AWAY FROM MARKET
"He's going to win, who knows when to fight and when not to fight." (Sun Tzu)
Opportunities are not always available in the market. There are times that your trading system would not work and it is important for a absences from trading market. If you insist in the trading market in conditions like that, you'll end up in a series of losses and deplete your capital unnecessarily.
When you experience a series of losses, it was clear sign for you to stop trading. Contemplate whether it is a problem with myself, or a system that does not work under certain market conditions.
During live your reflection, stop all your trading activities until you find out the real problem. You will learn more about yourself, trading systems and market. This experience will help in assessing when to trade and when not to trade in the future. Do not fight not meaningless coward, it is the mantra of "survive to fight another day".
"If the battle is sure to produce a victory, then you must fight, even though authorities had forbidden it. If fighting will not result in victory, then you won't have to fight even when there is a bidding authority. "
It is important to learn to trading when there is a favorable opportunity to do so. But more importantly learned not to trading when unfavorable situations.
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