Monday, 19 April 2010

Zen Buddhism and the modern stock trader

Surprising as it may sound, but short term equity trading is very much a Zen phenomena. Short term, high velocity trading requires immersion into a larger force, an appreciation of the finite nature of one's power as an individual being in a larger entity. An understanding that what is real is not always right and what 'should be' is different from 'what is.'
Zen emphasizes experiential prajñā, particularly as realized in the form of meditation, in the attainment of enlightenment. As such, it de-emphasizes theoretical knowledge in favor of direct, experiential realization through meditation and dharma practice. (Zen, Wikipedia.)
The stock exchange may be an odd place to look for enlightenment but dig deeper and it may not seem that odd a starting point.
The Great Buddha Hall at Chuang Yan Monastery

Any stock exchange is comprised of thousands, if not millions, of buyers and sellers converging at single point: a company's stock. No specific buyer or seller dictates the price at which a transaction is executed.
More buyers make the stock dearer and more sellers push the price lower. The final price is the culmination of a process called price discovery.
Simple enough, but where's the Buddhist connection?
Well, a short term trader becomes a part of the larger market. The market formed by these thousands of buyers and sellers. She does not fight the greater powers, the universal forces. Forces represented by the broader market.
These universal forces are much larger than her. She accepts them. She becomes 'One' with the market. A form of meditation, meditate and be mesmerized by the ticker tape! And, of course, control the base emotions of greed and fear.
The stock market may not be just or fair but it's difficult to argue with reality. If Coca Cola's stock price moves from USD 54 to 55 then USD 55 is the new reality.
A trader may not like it. A trader may not have anticipated the price movement but, hey, it is what it is! And, it is 55. Argue all you want.

Like a Zen Buddhist, what a short term equity trader really needs to do is search within herself to understand why she was not in tune with the broader market forces. Accept the loss and move on.  
Equity trading activity is almost an out of body experience. When 'in the zone' money making trades flow effortlessly. Outside the zone and the trader is a bumbling klutz who loses money in the market faster than a croupier collects money from a gambler.
Trading is an individual experience. The results, measured in hard cash profits and losses, cannot be ignored. The numbers brutally undress the individual trader. Eloquence or sophistry cannot hide bad numbers. Good numbers embalm the soul.
It's like standing in a temple or a mosque and coming face to face with oneself. That's all there is to it. That's the way it is.

Want to argue – go argue with the market.  Let the market know Coca Cola should trade at 50. It may make one feel better ... until one realizes the account statement still values holdings at the real market price. Not what the price should be.
Control greed and fear, open an online brokerage account and practice Buddhism in front of your computer screen. That is the way.
The way that can be spoken of
Is not the constant way;
The name that can be named
Is not the constant name.
The nameless was the beginning of heaven and earth;
The named was the mother of the myriad creatures.
Hence always rid yourself of desires in order to observe its secrets;
But always allow yourself to have desires in order to observe its manifestations.
These two are the same
But diverge in name as they issue forth.
Being the same they are called mysteries,
Mystery upon mystery -
The gateway of the manifold secrets.


  1. This is very contrary to buddhism, as buddhism rejects the feelings of desire, and says this leads to eternal suffering. I would strongly recommend you review this article on errors,

    Yours Sincerly,


  2. Hi Aandaleeb,

    Thank you for visiting and taking the time to post a comment.

    The article is not meant as an academic treatise on Buddhism and, certainly, one can identify many areas where the ideas may be contrary to Buddhist beliefs. The article picks up on theories expounded upon by psychologist Ari Kiev who talked about traders finding the 'Zone' for optimum performance. Athletes use a similar concept of getting into the 'Zone' for optimum performance.

    I hope you will continue to visit my blog in the future.

    Best regards,