ZF Capital

In your market analysis, do not get so cerebral that you are ineffective. It doesn’t matter if the computer says so, reality is the last sale. Traders and investors have a tendency to overanalyze. One of the stages every trader (and many investors) goes through is over reliance on mechanical and computerized trading systems. These are very useful tools, but they are not answers. Many times I have seen the technical indicators say, ‘sell,’ yet the market just refuses to cooperate. It keeps trading up. The only truth is the last sale. Fight the tape and you will collapse.

– Dean Lundell, Sun Tzu’s Art of War for Traders and Investors

These faults can be found in many traders and investors: Do not be careless or reckless with your trading. You trade for profit, not for fun and games. Do not be timid; once you have identified an opportunity, attack it. Act on it. Do not get angry over a losing trade and swear to get even. You won’t. Do not get down on yourself for a losing trade, or even a string of losing trades. Find out what you are doing wrong and correct the problem. Do not fall in love with a stock, a bond, or anything else. You must learn that this is conflict, and you must be rather mercenary with your trading and investing.

– Dean Lundell, Sun Tzu’s Art of War for Traders and Investors

As an individual trader or investor, you must make up your own mind whether to join the battle or stand aside until it is over. If you are joining the battle, choose sides carefully and limit the amount of resources you are willing to commit. It is better to plan ahead and anticipate when others will join the battle to turn the tide of the conflict. You know that if your market breaches a particular price level, others will be prompted to join the fray and turn the tide so the opposing side capitulates. Focus on the overall goal of why you are involved in the market in the first place.

– Dean Lundell, Sun Tzu’s Art of War for Traders and Investors