Peter Castle - The Zen Trader: How ancient wisdom can help you master your mind and the markets

THE ZEN TRADER

THE ZEN TRADER

How ancient wisdom can help you
master your mind and the markets

Peter Castle

harriman house ltd

3 Viceroy Court

Bedford Road

Petersfield

Hampshire

GU32 3LJ

GREAT BRITAIN

Tel: +44 (0)1730 233870

Email:

Website: harriman.house

First published in 2022

Copyright Peter Castle

The right of Peter Castle to be identified as the Author has been asserted in accordance with the Copyright, Design and Patents Act 1988.

Paperback ISBN: 978-0-85719-826-6

eBook ISBN: 978-0-85719-827-3

British Library Cataloguing in Publication Data

A CIP catalogue record for this book can be obtained from the British Library.

All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publisher. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published without the prior written consent of the Publisher.

Whilst every effort has been made to ensure that information in this book is accurate, no liability can be accepted for any loss incurred in any way whatsoever by any person relying solely on the information contained herein. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by the Publisher, by the Author, or by any client or employer of the Author.

I would like to dedicate this book to my parents.

To my mother, Rona Mary Castle, who recognised early in my upbringing that the best role for her as a mother was to trust and let me be the person I wanted to become. And to my father, Kevin Charles Castle, who despite his conservative and more rigid thinking, coupled with a distrust of the share market gave me as a Christmas present (in 1999) the book Market Wizards and wrote inside the front cover:

To Pete,

May you one day too become a Market Wizard!

Love Dad

CONTENTS

Peter Castle has been a share trader for 27 years, 22 years full time.

Peter Castle (Taishin Shodo) is also an ordained Zen priest.

In this, his second book about trading, Peter explains the wisdom of Zen psychology and its relevance to a trading mindset. To trade well and live happily and successfully, you need calmness and peace of mind; once those qualities of mind are achieved, the understanding of what it means to be truly one with the market will follow.

After many years of studying Buddhism throughout Asia (Vietnam, Thailand, Taiwan and Japan), as well as two years as a monastery resident studying the Tibetan Kadampa tradition, Peter was ordained as a priest in the Zen Order of the Boundless Way ( Mugendo Zen Kai ). This tradition is officially recognised and associated with the Rinzai Zen tradition of Japan.

I have little direct experience with Zen. My closest contact with Buddhism was a decade ago when a townhouse next to mine in midtown Manhattan turned out to be a small Buddhist monastery. I went to a few of their public events. The chief guy, an American, had a car, a girlfriend, owned a farm in a neighboring state, and enjoyed his steak and wine. Very pleasant people, albeit quite far from the Western canon of poverty, chastity, and obedience.

In reading Peters manuscript, I immediately saw his focus on trading psychology the essential factor in any traders success or failure. The crucial role of psychology is something that many traders and most beginners dont recognize.

The technical side of trading is quite straightforward. Analyzing markets, we deal with only five numbers for any bar or a candle: open, high, low, and closing prices, along with volume. A handful of technical indicators will help you analyze those numbers and reach a reasonable conclusion whether there is a trade in the first place, and if there is, should it be from the long or the short side. This is something I can teach an average person in less than a week.

Developing sound trading psychology takes a lot longer. It could be years. There are several paths you can take to develop the necessary attitudes and skills. You need to select a path that emotionally appeals to you and stay on it. Peters Zen is one of those options.

In my first book I wrote how to apply the principles of Alcoholics Anonymous to trading, particularly loss avoidance. In recent years I began to stress the importance of record-keeping in order to learn from your experiences. I say: Show me a trader with good records, and Ill show you a good trader.

At a conference in Texas, I met an old lady, a former school librarian, who became an active and highly successful trader after retiring and receiving an inheritance. She was very religious and considered herself a steward of the Lords money. Shed pray and trade, and if a trade went even slightly against her, she exited quickly because the money wasnt hers to lose.

The point here is that every successful trader has their psychology tightly organized. Each of us needs to find our path to success. By picking Peters book youre making an important step in the right direction. As you read his engaging and personal book, youll soon discover whether his Zen approach appeals to you.

I wish you success,

Dr Alexander Elder

SpikeTrade.com

New York, 2021

T HIS book is written with a purpose: to compare and connect the methods of trading to the philosophies and techniques of Zen. The intention is to show the reader that embracing Zen in their trading and life will improve not only their financial situation, but also their happiness and overall well-being.

Each chapter shows comparisons between trading and Zen, and demonstrates how adopting a Zen approach will elevate your performance as a trader (or investor) and bring more peace and profit into your life.

Many professional traders talk about their edge . For example, an edge can be a trading system based on mathematical probability. Another trading edge may be taking advantage of market anomalies, or perhaps trading non-correlated markets to spread risk and reduce portfolio volatility. Those are just three examples of many. However, this book offers you the greatest edge of all: a Zen mindset.

A major goal in my trading career has been to make money as safely and easily as possible, without complex, time-consuming methods. Another equally important goal was to be able to trade with minimal stress.

So how have I, as a full-time trader for 20 years, managed to do that? To survive, profit and keep my sanity? Well, I havent; and then on the other hand, I have. If that sounds paradoxical, perhaps it is. Zen can be like that.

Let me explain.

One of my first trading teachers claimed that many are attracted to trading for the wrong reasons. My assumption was that I was not one of those people. However, the realisation occurred (unfortunately, much later than I would have preferred) that I too was in that category. As aspiring traders, we think we know ourselves well, but many of us do not.