Light and dark, and up and down, and left and right, and good and bad are all polarities invented by the human mind. They are thought of as separate opposites whereas they are really complementary poles of unities. They may be helpful distinctions and then again.
In financial markets some of the opposites we see turn out to be circular. For example an extreme of bullishness is obviously the most bearish possible moment. From a top, prices can only fall. And in the currencies there is an extra twist in the fact that any currency parity is a two sided coin: e.g. a top for the dollar is a bottom for the D-mark.
The so-called yin and yang symbol of the Tao (the T’ai-chi T’u) has been modified to serve as a logo for Currency Bulletin. You will find it at the top of the back page of CB – and on the front of this book. In the logo, the interface between light and dark sides of the yin-yang symbol is made by a dollar sign – noting that the tail of each tadpole interfaces with the head of the other. Such is ‘the way’ of the dollar.
“The yang returns full circle to its beginning; the yin attains its maximum and gives place to the yang” – Kuei Ku Tzu, 4th century BC.
Taoist 1 1 4 , one who practices the Tao (see Tao). The Tao, incidentally, is central to Zen buddhism and to the practice of such Japanese crafts as Bushido swordplay, judo, archery and the tea ceremony. The essence of all these crafts lies in the abolition of the ‘I’: the consciousness of the participant is absorbed by the action.
Technical 60 Opposite of fundamental. “technical” data are all those concerning price movement (charts) and volume and any other data which relates to trader activity – such as open interest. In the US stock markets, much more technical data is available than elsewhere including odd-lot activity and open interest: corporate insider activity; block trades and so on. The “technical analyst” believes that the technical data are the only kind that are helpful for anticipating price action; and that “fundamental” data, concerning economic and financial events is unhelpful or even positively misleading.
A chartist is a technical analyst who places all or most of the emphasis on past price action as opposed to other technical data.
Teweles, richard, author with Frank Jones ofThe Future Game, a useful overview of futures trading (see book list).
The Man who Mistook his Wife for a Hat 114 . Riveting series of essays by psychotherapist Oliver Sachs.
Time-frame, time horizon 70 . 1)Our own: the duration we assume for any given trade. It’s crucially important to define it – in weeks, months or years, or days. 2) The market’s. The time-frames of the individual traders out there – from the intraday time-scale of dealers, locals and other market-makers to the multi-year horizons of strategic investors and corporate hedgers – result in certain rhythms of price fluctuation reflecting the build-up and dismantling of speculative positions.
Total return 34, 45 . The combined return of income and capital. Maximising total return is assumed to be the motive for every rational currency trade.
Trampolining 64 . A graphic description of volatile price ranging, often seen at reversal points.
Transaction costs 82 , or dealing costs. Includes the overall costs of commission and spread between selling and buying price (bid and offer). Also called “slippage”. In the interbank market, spreads can only be ascertained by obtaining a bid-and offer quotation from a bank that has no idea whether you wish to buy or sell.
Transactional Analysis 1 1 1 . See Berne, eric.
Treasury bill 3 9 (T-bill). A Treasury promissory note to repay at par specific maturities up to 12 months. Bond (t-bond). A Treasury obligation to pay interest and repay principal at par on a maturity which was originally over 10 years (T-note, less than 10 years).
Trend 5 5 . CB distinguishes between a trend such as might be defined by lines drawn on a chart, and the general feeling among participants about the on-going direction of prices, which it calls the “perceived trend”.
Tudor Jones , paul 83,88-9 . An astonishingly successful futures trader, thought to be the only fund manager on record as having achieved 100% gains for 5 consecutive years in a public fund.
Underlying rationale 34 . Fundamental driving force behind a multi-month or multi-year price trend. There’s usually only one.
Underlying trend 34 . Multi-month or multi-year price trend.
Undertrade. to trade smaller positions than you are tempted to, and trade less often.
Value-led (trader) 30, 51 . One who tries to buy low (after a fall) and sell high (after a rise). As opposed to price-led trader.
Vertical thinking 114 : see Lateral thinking.
Wedge 6 5 . A self-descriptive chart pattern, more often making a pause in a trend (a “continuation”) than a reversal.
What Do You Say After You Say Hello? 112 . By Eric Berne. The popular basic text-book of Transactional Analysis.
Weinstein, Mark 83-5 . Fabulously successful American wizard trader, interviewed by Jack
Schwager.
Yield curve 43 . Denotes the shape of interest yields along the spectrum of maturities, as it were plotted on a chart. It may be a straight line rather than a curve.
Yield differential 3 9 . The difference between one yield and another – particularly between yields at similar maturities on one currency and on another currency.
Yin and yang 49 . Originally the shady and sunny (respectively) sides of a mountain – as symbolic of polarity in nature.
Yin represents the female, the earth, the moon, the intuitive, the dark; Yang the male, the sun, the strong, the rational, the light. The complementary nature of these polarities lies at the heart of ancient Chinese philosophy and of Taoism.
It also seems to have been fundamental to the thinking of the 6th century BC Greek philosopher Heraclitus, whose most famous saying was “Everything flows”. Another remnant of his thought was “The way up and down is one and the same”.
Zen. just flick a scrunched-up ball of paper into a bin, and it will probably go straight in: think about it, and you’ll probably miss. There is much more to Zen: for the “most explicit and orderly account… in English”, as one critic put it, look to the Way of Zen by Alan Watts. In the context of trading. 1) the discarding of the ‘I’ (as in ‘I am right’), and 2) the emphasis on ‘just doing’ without worrying, when you can see what to do, these are two gold nuggets of Zen thought.
Zen & the Art of Motorcycle Maintenance 72 . Master-piece by Robert Pirsig.
Zen in the Art of Archery 90 . Masterpiece by Eugene Herrigel.
Zero-sum (game) 47 . In most investment games, like real estate and stock markets, and like precious metals and art markets, investors can win or lose because of the expansion or contraction in the size of the cake. The only way all of them – or indeed most of them – can win is if the cake expands: and most players in these games believe the cake will expand over time