Tao Te Ching (Chapter 17)
The very highest is barely known.
Then comes that which people know and love.
Then that which is feared.
Then that which is despised.
Who does not trust enough will not be trusted.
When actions are performed
Without unnecessary speech,
People say, “We did it!”
(By Lao Tsu, translated by Gia-Fu Feng and Jane English)
Chapter 17 is about leadership. A leader can lead through love or fear. A trading teacher can teach through fear or love. Fear says, “Watch your stops and your gluteus maximus!” Love says, “Stop your watches or stop putting yourself through trading hell. Retire!” “O.K,” Lao Tsu replies. Then he tries leaving humanity behind when the gatekeeper to the mountain pass yells, “Hey, old guy! You’re not getting through here until you write down eighty-one chapters of the Tao Te Ching. And if you make any spelling mistakes, I’ll make you start from scratch!” So if you’re a Taoist trading teacher, it’s better to do your writing first which is what I’m doing.
A Taoist trader learns to embrace life fully and then applies that knowledge to trading. Embracing life leads to acceptance. And acceptance of market adversity is important for a trader. What if the market itself is looked at as a leader? Does that mean a trader is solely relegated to the role of a follower? Traders follow the market. And yet they look for leading indicators. But unless you’re the Fed, you can’t lead the market. When actions are performed with unnecessary speech, the Fed says, “We did it!”