Tao Te Ching (Chapter 49)
We hold no fixed opinions.
Our hearts are therefore open
to the hearts of all.
We extend kindness to the kind
and unkind alike.
Thus kindness becomes our very nature.
We extend trust to the trustworthy
and untrustworthy alike.
Thus trust becomes our very nature.
We don’t contend with people
by seeking to gain advantage.
People around us lose their edge
and we become loving friends
to the whole world.
(By Lao Tsu, translated by William Martin)
Follow the Market’s Energy
“We hold no fixed opinions.” Let the market reveal its direction. “We don’t contend with people by seeking to gain advantage.” There are moves in aikido, a Japanese martial art, in which you add energy to your opponent’s direction by pushing and/or pulling the opponent in the direction the opponent is moving. This is similar to entering a breakout trade by adding your trade’s energy to the market’s directional momentum.
And since in aikido, like in the New Testament, ideally you should love your enemy, traders shouldn’t look on the market as the enemy. “Our hearts are therefore open to the hearts of all.” The market included.
Trust the Unkind Market
But you may say, “The market can’t be trusted.” “We extend trust to the trustworthy and untrustworthy alike. Thus trust becomes our very nature.” You may say, “Certainly the market isn’t kind.” “We extend kindness to the kind and unkind alike. Thus kindness becomes our very nature.”
In the aikido example, one movement is a pivot that is called “entering” (your opponent’s space) and at that moment you appear to be walking with a friend—one hand resting on your friend’s back, the other hand gently touching and leading your friend’s wrist (almost like holding hands). “People around us lose their edge and we become loving friends to the whole world.”
Love the Market as Yourself
“Terry, what kind of #@*! are you espousing now?” Trust a devious market? Be kind to a vicious market? Make friends with and even love a devious and vicious market? Are you out of your mind? Actually, I am. I’m speaking from my heart. And my heart knows that life is made of lessons. And a major lesson in both trading and life is to love unconditionally.