Sun Tzu’s Art of War in Trading

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Dating back from 5th century BC, these pearls of wisdom from this legendary military strategist and philosopher still applies, even to the modern trading world today.

1. Be like water. Water shapes its course according to the nature of the ground over which it flows

When traders defend their market assumptions as if it’s their treasure, it reveals their vulnerability. Don’t be too rigid, be flexible like water.

2. Advance without coveting fame and retreat without fearing disgrace. Have your only thought be to protect the country and do good service for the sovereign.

Don’t focus on the profit or loss of money. Concentrate on playing the game well and money will be the by-product of trading skillfully.

3. The supreme art of war is to subdue the enemy without fighting.

By accepting how the market develops instead of fighting against it, traders will find more freedom by going with the flow.

4. To lift an autumn hair is no sign of great strength; to see the sun and moon is no sign of sharp sight; to hear the noise of thunder is no sign of a quick ear

Observe more than what is being presented to you. Look beyond what you see.

5. There are not more than five primary colors (blue, yellow, red, white, and black), yet in combination, they produce more hues than can ever be seen.

Keep trading simple. By understanding the basics, the possibilities are endless.

6. He who knows when he can fight, and when he cannot, will be victorious.

Impatience can put you at a big disadvantage. Do not be hasty in making decisions, let the trades come to you as it can save you time and energy. Patience is not just a virtue here, it’s gold.

7. It is a military axiom not to advance uphill against the enemy, nor to oppose him when he comes downhill.

Do not go against a trend once it is in place, it has a bigger potential in continuing the same course for awhile.

8. The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy.

It’s important to set up defenses (stop loss/ take profit) and not let your guard down while actively looking for trading opportunities.

9. If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.

If you understand the markets and understand yourself, you will constantly win. By not knowing either one, your results will be inconsistent.

10. As circumstances are favorable, one should modify one’s plans.

We should only add to winning positions and never average down on a loser. Profits are carried by momentum, and if you are on the right side of momentum, you can make a lot of money. If you are losing, stick to the plan, and exercise stop losses. When winning, increase position size as new entry signals are confirmed.

Trade wisely, and it might be the best financial choice you have ever made.