Empty Your Cup

Paper traded the ER2 last night using a different approach from that which I've become accustomed to, and my performance was unimpressive at best. I was stopped out at least 6 times, and I stop counting after that. It was after I resumed to using my scalping method that I recovered some of the losses. But I was hardly consoled. I knew it's time I take a pause to figure out what exactly I have been doing and whether I'm sabotaging myself in the long run.

What transpired last night reminded me of 3 scenes from " The Forbidden Kingdom starring Jackie Chan and Jet Li.

In the first scene, the impressionable, kungfu obssesed protagonist was seen furiously cutting away wild grass as part of the training program devised by the drunken beggar played by Jackie Chan. Jason, the protagonist, needed to master martial arts in a very short period of time in preparation for his mission: to take on the Jade Army and use the "magic staff" to free the Monkey King that has been imprisoned for 500 years by the evil Jade Lord.

"When are you going to teach me kungfu?" Jason, who was hardly hot on the heels of the powerful opponent he was to take on, was getting frustrated with Lu Yang, the drunken beggar, for the latter's indifference to his lack of progress.

"You want to learn kungfu? I'll teach you kungfu" Lu Yang responded with a spoonful of sarcasm, before hitting Jason apathetically in his arm with a stick.

"That's called STRIKE; tomorrow teach you BLOCK".

Lu Yang's message clearly didn't get through to Jason. In the scene that followed immediately, Jason was seen reciting enthusiastically names of kungfu techniques like Buddha's Palm, Iron Elbow, One finger Death Touch, probably hinting to Lu to teach him these techniques.

Lu was pouring tea into Jason's cup as he was yakking away, and overfilled his cup.

When Jason told him to stop coz his cup was full, this was what Lu said,"Exactly, how can you fill your cup when it's already full? How can you learn kungfu when you already know so much?...no Buddha Palm. Empty your cup."

In the 3rd scene, Jason was totally nonplussed by Jet Li's character, the Silent Monk, and Lu Yang, who were competing to get Jason to learn their respective techniques. One was traditional; the other, unorthodox at best. Both equally potent, but were clearly overwhelming for Jason, who hasn't any FOUNDATION in kungfu to begin with.

The 2 kungfu gurus' attempt to enlighten Jason on the way of the martial arts culminated with them taking turns to utter what seemed at first to be a heap of kungfu mumbo jumbo :

Kungfu, hard work overtime to accomplish skills...
Learn the form, but seek the formless.
Hear the soundless.
Learn it all, and FORGET it all.
Learn the way, but FIND YOUR OWN WAY.

So much for counting on gurus to really teach you something. :-D

I have to say that I'd never have expected to take away so much from a Jackie Chan movie.

All the above martial arts gobbledygook have offered much insights that I find applicable to trading.

What I was reminded of is this: if you find yourself lost and losing precious capital, it's worth taking a step back. Go back to basics, start from taking a good look at how you manage your finances and the risks you're taking with your trades, learn to read pure price movements without the help of indicators (Jesse Livermore could do it, so can you), learn to identify key supports and resistances, etc. Drop your software, your systems, your Elliot waves, your Fibonacci fans and arcs, the 50 indicators you use for entry signals etc, etc.

Just go back to learning how to block and strike properly before you venture back into the market with your Iron Elbows and Buddha's Palm, only to get clobbered by gurus who have put in years of hard work to fortify their foundation.

Do something about those itchy fingers that are ever so tempted to hit the "transmit" button (Now, that's what I'd call the "One Finger Death Touch").

I've saved the best for last - the single most important trading skill that you have to learn, one that's probably the most difficult to master is this:

If the trade has gotten awry, before the situation gets dire, like what M said, "RUN!"