I am fascinated with the Samurai. Their strict adherence to a code of conduct and ethics, called Bushido, is so counter to our culture today that the idea feels distant and foreign, but stirs something that greed and materialism just can’t. The Bushido code is typified by seven virtues: Rectitude, Courage, Benevolence, Respect, Honesty, Honor, and Loyalty.
As a side, I am starting to believe that to be a good trader, it does not require that I be a good person nor does being a good person ever come through being a good trader. They are both very worthy pursuits, just don’t try to attach them. Don’t pursue one through the other, they are very different.
Unfortunately, the Bushido code also has it’s darker side. This problem comes as a direct result of their strict adherence to these principles. There has to be a consequence for not following the Bushido. What happens if a Samurai were to act contrary to this code? What happens when the opposite of honor or respect or honesty happens?
Stephen Turnball in his book “Samurai: The World of the Warrior”, describes the role of seppuku.
“In the world of the warrior, seppuku was a deed of bravery that was admirable in a samurai who knew he was defeated, disgraced, or mortally wounded. It meant that he could end his days with his transgressions wiped away and with his reputation not merely intact but actually enhanced. The cutting of the abdomen released the samurai’s spirit in the most dramatic fashion, but it was an extremely painful and unpleasant way to die, and sometimes the samurai who was performing the act asked a loyal comrade to cut off his head at the moment of agony.”
I am definitely not trying to say that seppuku should be the consequence for poor trading decisions. That would be crazy.
What this does represent to me is the ability of the Samurai to not get emotionally involved. It was purely about the code, the action, the honor, or dishonor. According to what I know of the Samurai, they simply didn’t compromise. They would never have moved a stop or moved a profit target because of greed.
The Samurai were the epitome of rules based living or trading. If the person or thing stands for the same principles as you and is beneficial to the cause, not the self or the ego, but the cause, then it can live. If it is contrary in any way at all to what the principal stands for and is attempting to accomplish, cut it out immediately. Kill it.
So to take it to trading. I find that my worst trading is when I get these two concepts mixed up. I let the loser hang around with hope and patience that it will work for me and inevitably, it eventually erodes at the principal I am trying to accomplish, namely account accumulation. Meanwhile, when a trade is working in my favor, I am quick to kill it. This is entirely backwards.
Be patient with the winners but adhere to the role of seppuku for losers. Never let them hang around. They will destroy your trading from the inside out.