Zen and the Art of Trading

Sumit Singh, a young trader sends this:

An interesting similarity I found while reading two different books on two different subjects:

“The “Holy Grail” is not some magical source that is the key to the markets, as most people believe. Nor is it about following someone else’s philosophical secrets of trading. The metaphor of the “Holy Grail,” according to scholars like Joseph Campbell, is all about finding yourself. Similarly, the “Holy Grail” in the markets – the key to unlocking profits – is all about finding yourself. To unlock the “Holy Grail,” you need to appreciate your own ability to think and be unique. People make money by finding themselves, achieving their potential, and getting in tune with themselves so that they can follow the flow of the market. Getting in tune with yourself means finding an inner peace inside. It means finding a balance between profits and losses. The Holy Grail is not a magical trading system; it is an inner struggle. Once you’ve discovered that, and resolved the struggle, you can find a trading system that will work for you”.

Van Tharp  – “Trade your way To Financial Freedom”

“I want to tell you that it is destructive to believe anybody, and it will be harmful to your life. No belief, no belief at all! Whosoever makes a belief system a basis for his life is entering into a world of blindness – and no light can ever enter into his life. He can never attain to light in his life. Someone who believes in others will never be able to know himself”.

Osho – “The Path of Meditation”

Selling at the Highs of a Reaction

It is much easier in a bear market to recognize the top of a rally than the lows of a decline. When a rally hits the top of an advance, Dow theory traders will expect resistance to step in.  ‘Top’ is usually previous support that is likely to become resistance. A decline is likely to begin.

What happens after the decline is crucial.   If, on the next rally, prices remain below the top of the previous advance, then the down trend is confirmed.

For the Nifty, the high(5945) made on Friday, March 15 was below the previous swing high(5971) made on March 11. If the March 11 high is not breached in the next few days, then a confirmed down trending pattern will be established.

While the Markets will do what they want, traders will look to sell on any rally that comes about.