A great trading book (free on the internet)...This is a real gem!

Hello Babypippers!

I was looking at long-term trading videos, books, etc.

and incidentally found this book, first published in 1992,


[B]“Zen in the Markets: Confessions of a Samurai trader”

by Edward Allen Toppel, a former floor/pit trader.

I am already finding it quite a good read, with [B]pages 21 and 23 being particularly poignant[/B]

(at least for me)…

Here is the free .pdf for the whole book:


ENJOY :cool:


Thanks, just downloaded it, will start reading at the weekend

No worries,.Sir!

How is your USD/JPY long? I was looking at Nikkei225 and Yen pairs last night and noticed that they are gathering strength to the downside…Do you think it will pause? The S&P500 and FTSE100 have not quite followed, whereas the DAX and FRA40 have… This uneven risk-off move makes for a difficult picture to assess under one umbrella (i.e. global risk aversion).

Im surprised at the general weakness in the dollar, almost as bad as sterling. Surely Yellen will do or say something to put some faith back in the dollar, having it weak doesn’t fit well with the American physche. I dont know what sort of effect this will have on US/Jpy imports/exports, might take a look at the COT thread to see what the consensus is

1 Like


Page 23

Remember, all we have to do is stay in the present
moment. Donít think about the past or the future. Focus
on the here and now, and listen to the voice of the market.

Is your avatar and Zen a coincidence?

I used to read some these types of books in my earlier years and they offer great advice on approaching trading. I will also read this with great enthusiasm at the weekend.

I wonder sometimes, do people in the modern age of instant communications and website info have the patience any more to read 85 pages. It is a shame but I sense nowadays new traders only want “the indicator and the instructions what to do, please”. Actually understanding what anything really means seems to be considered superfluous info and a waste of time. A bit like a vicar’s sermon on a Sunday morning - everyone will remember the first line and the rest is a waste of time and energy :slight_smile:

These early traders HAD to think about what they were doing and the market dynamics because they were at the cutting edge of development - and they pretty much all drew their charts by hand every day - what better way to really absorb what the charts are saying! :slight_smile:

I agree, Manxx,

we are all becoming short-fused in our attention span, because our peers are all demanding

faster response to communication, therefore we are obliged to curtail deep thinking and in-depth

reading in order to accommodate everyone’s expectations of our time.

However, we must also be taught and educated to filter a lot of ‘noise’ from a Google-age information

over-supply, and it will be only those with the right learning tools and guidance that, from school

years to adulthood, will be better equipped not to be wandering round from pillar to post in the

virtual environment but be able to navigate/surf the internet’s vast landscape with a clear vision

of what they can get out of it that will be of real benefit.

This is why forex traders struggle, also, when embarking on their quest: the overwhelming

amount of information they will receive will be impossible to decode without an expert person

by their side to help them filtering out unhelpful or even false information, leaving newbie

traders to situations where two reliable sources (even two authors from the same website)

will clearly be at opposite ends, contradicting one another.

Imagine the journey, as an adult, of trying to learn how to read, write, and pronounce the sounds

and shapes of a new language all by yourself, or using the internet: you would find a lot of

information at first, but then this very availability could quickly turn into confusion, as there would

be no central route to take… What would you need to learn first? What things could you filter out

until you built your confidence and delved into them later? What kind of learning plan do you

need for YOU?

Similarly, in trading, there is no point reading about Soros, Yellen, Buffett, or Lagarde and their

views on macroeconomics if all you need, for example, is to know how to buy or sell

EUR/USD on the 5min chart…

The learning must be scaled and tailored to YOUR needs, not someone else’s…

This is why so many newbies on BabyPips ask for ‘mentors’, and it is not fair to just call them

lazy: in every walk of life, learning with a real-life coach/tutor/mentor is often the quickest way…

Human beings, even in the digital age, remain highly sociable beings that learn a huge amount when

imitating and connecting eye-to-eye (or voice-to-ear, or body-to-body) with other human beings.

Sure, the internet and books are great tools, but trying to teach yourself something like

financial investment/speculation on your own is like trying to learn how to cook from a book,

or learn how to drive without anyone ever showing you… That is why, even in this day and age,

there are still driving instructors, sports coaches, or music teachers; equally, learning to trade purely

from Google searches can be done but you may need a much longer journey and even then you may

feel like you really missed out on being taught by a professional.

Just my tuppence worth of thoughts.

Thanks again, Just finished reading it and recognizing my mistakes.

Great to hear, TC Holland!

I hope that it will help you… I am sure it will help me too…

I better get reading it :slight_smile:

I hear you there, Eddie.

As you probably know, I know [I]very[/I] little about “fundamentals”, but I was wondering whether the fact that it’s currently Presidential election season might have anything to do with that, and perhaps particularly the rather worrying nature of this current Presidential election season, with its (however remote) possibility that someone perhaps unprecedentedly dangerous to the economy might theoretically be elected, this time?

Books are always a good method of improving our knowledge about any thing. There are many good books about trading, I’ve downloaded this book, will read it and hopefully get some good additional knowledge about forex market from it.

I am now three-quarters of the way through this book,

and it pains me to think that my long-term GBP/NZD long,

if I were to apply the principles outlined in the book,

could be viewed just me trying to mask a bad trade with an ego-boost

by calling it ‘long-term investment’



Great little book…

Well, what a confusing set of thoughts are to be found in this book! Whilst I did find some gems concerning mindsets and trend following which I will post next (probably tomorrow as busy today), on the whole I did not like the content and I think the main thrust of this book is irrelevant, and even misleading, for the typical kind of trader/trading that we encounter here on this site.

The book seems to talk more about what doesn’t work than what to do right. For example:

Fundamental analysis apparently doesn’t work:

“Our minds, egos, left hemispheres, must get into the act no matter how many times they have been proven to be painfully incapable of doing the job consistently. Just give up the idea that we can figure it out! The dartboard throwers have proven that they are much better than most money managers. The rush to indexing, a popular form of investing, is an admission that the managers can’t figure out the direction of the market either! All these funds want to do is be average. They are willing to settle for being average because their managers know that the market can’t be figured out. They know that if they try, they’ll probably wind up below average. If the market were logical, we’d all be winners. So let’s give up applying a system of expected outcomes to that phenomenon that has eluded the best minds sifting through a multitude of data for their analyses.”

Chart analysis apparently doesn’t work:

A chartist will say that a market has broken out if it goes through a certain area of resistance. They will also say that a market has broken down if it goes through a support area. Charts are total gibberish. They have no validity. They are simply history, and like history, if we continue to study them, we will
probably commit the same errors of the past.

Mathematical/geometrical analysis apparently doesn’t work:

"Some mathematicians think that they can provide a switch parameter based upon historical price movements and statistical formulas. Beware of these people and their systems!

What apparently [U]does [/U]work (if you want to believe it) is:

(a) simple gut feel:

“gut feeI can tell you what to do as a trader, but until you actually start trading, you will not fully understand, nor will you be able to fully develop a trust that allows you to go with your gut feeling. That is essential for success. Many traders seem to feel the moves as they are occurring. They trust these feelings and go with them. They are truly one with the market. When they are wrong they have the ability to correct their mistakes quickly. These are the real Samurai traders.”

(b) Gaining the right mindset through some kind of lobotomy therapy that kills the ego:

“One of the surest and hardest ways to help you conquer your ego is to meditate. It is not easy. Stay with it. You’ll be amazed at the results. Don’t be spooked. This is powerful medicine. Obviously, this is just one person’s prescription. Experiment and see what works for you. Only then will you find out what the market really represents. Some people turn to yoga, chanting, painting, transcendental meditation, Open Focus® training, or any other discipline that works to reduce ego’s power over us and help us stay in the flow.”

© Just the last price:

“We must keep our focus in the here and now. We shouldn’t attempt to predict future direction.
History doesn’t repeat itself. What happened in the past has no known effect upon the market. But our memories are strong. We would like to think that history matters.”

“How do you know if a market is rising? Simple! Look at the last sale. Is it higher or lower than the previous sale? If it is higher, it must be going up. Yes, it may go down again, but we do not know that. Remember, all we are concerned about is what is happening in the present moment. That’s all that counts. Stay in the present moment. That’s all there is for sure.”

Well, at least for me, this was not very helpful! Perhaps the lure of this book lies more in the attraction of some curious eastern mystique that has ridden the tides of time and fortune and is there to carry the fortunate few to the heights of success rather than any concrete tangible advice on how to professionally and consistently succeed as a trader and/or investor. But then I am an engineer, what would I know about such things! :slight_smile:

But there were some good things too…back later… :slight_smile:

Great comments, Manxx!

I would agree, it was quite dismissive of

chart analysis; however, it made me think:

what if we traded without second-guessing

the market, without a bias? Is being reactive

such a bad thing (e.g. getting into a.tremd half-

way up/down, rather than trying.to.pick tops and


I think this.book dismisses the long-term approach

indirectly,.so it.was.not.so.useful.from.that

point of.viee…

I liked how it tackled.the.ego.issue,.and.indeed

our projections.in the market.can.often be.clouded

by the ego.- memory.of.past.performance,.for

example,.can be as.much of.a.burden.to.a.clear

mind.as.an aid,.as.we.can start thinking that we

KnOW what the market will.do.next…

True pure discretionary/‘gut feeling’ trading is.pretty difficult, so using systems.and.indicators can.make.it
easier for.us to.grasp price’s ever-flowing infinity; what this book.does.not.say, and.i.agree.with you that it should maybe axknowledge it.is that as much as.you.can.have good.‘gut feeling’ when trading, you also may need.to use price.analysis.to.enhance.your odds…

Using.a.probabilistic approach based on trend lines or.previous price.levels is.not a recipe.for.disaster and.ruin,.if used simply with an awareness that it may.not.work…that is.why.money management is there: to.ensure that, regardless of outlr trading approach we.do.not.blow our accounts.


Hi, yes I also felt there was good substance with some of those issues you mention and certainly about trend following. But i need time to think what to write about those as they are more subjective matters! But i will talk about those but today is devoted to getting the summer cottage back into use after the long winter!

Would agree with you Manxx. Read the book a while ago and some of the general principles are solid but we all know these principles already. The biggest issue I had was his claim that charts are gibberish. That’s obviously total nonsense as any cursory look at charts will show. The market pays attention to certain key levels and ignoring them seems foolish. An obvious example would be you sit down at your computer and see price is rising so by his logic you should just hit buy. Checking however to see if price is maybe at a key level such as yesterday’s high could easily save you from entering a bad trade. It’s possible that his gut worked for him but that’s most likely the accumulation of many tens of thousands of hours and seeing the same kind of things play out.

I’d also have issue with the huge generalities he makes which while sounding helpful actually aren’t all that helpful once you think about putting them into practice. For example cut your losers quickly. He gives no info about what quickly actually is. Cutting your losers quickly sounds great in theory but can end up being pretty expensive in practice if you don’t give trades room to roam a bit. His idea that fundamental analysis doesn’t work is cloud cuckoo land thinking as well.

There’s some good stuff in the book though and the general rules he provides at the beginning of the book are solid guidelines to help you survive - especially in the beginning. The bit about trying to remove ego is good too. Being able to admit being wrong and taking a loss were the bits I struggled with the longest (and still do sometimes) but they are crucial.

I agree with everything you said :slight_smile:

What he does not say is that as a stock trader in the pit he would have had access to ‘volume’ in the form of
physical sentiment, namely seeing and hearing other traders screaming ‘buy’ or 'sell’
for a particular stock at any given time in the pit…

A trader who does not have access to a pit, especially as pit trading is all but dead now, will have to use volume charts, something which is readily available for some assets (e.g. stocks/equities) but not, as we know, for forex - the next best thing is the (lagging) weekly COT report for currency futures.

This means that if you see price going up but have no volume data you could be buying/selling into a false move that looks strong in the candlestick form but that has no strong volume behind it, thus essentially buying/selling into a loser - and it is all very well having a stop-loss, but if you kept buying/selling false moves, eventually the stop-losses would deliver you a ‘death by a thousand cuts’ :slight_smile:

This is a very interesting thread indeed! :slight_smile:

Yesterday was a great break in the countryside, immersed in the quiet “wisdom” of the great pines that have stood on the same spot for over a 100 years on the shores of the vast lakes whose latent power is still locked in the frozen stillness of the Northern winter waiting patiently for the Spring sun to set it free…time for mere mortals to think, to take stock, to make a new start…

This book talks about ego…and how to destroy it. But is that [I]really [/I]what we, as traders, really want to do? What do we actually [I][U]mean [/U][/I]by “ego” and what is its [I]real [/I]function? Is ego actually, when controlled, [I]essential [/I]to good trading rather than its ruin?

If one looks into the definitions of “ego” then it seems that it actually gets a pretty raw deal in the way the term gets applied. It appears to have become synonymous with characteristics such as pride, vanity, self-importance, selfishness, megalomania, superiority, etc. But in fact it is a term utilised by Freud simply to refer to our conscious mind, our existence, our identity.

Do we really want to suppress something that in reality promotes self-respect and personal worthiness? Is it not good that traders are fully aware of themselves and their situations? Rather than destroy our ego, is it not beneficial to cherish and nurture that which is responsible for our thoughts and feelings and forms the “seat of the faculty of reason”?

According to Wikipedia Freud used the word ego to mean:

"…a set of psychic functions such as judgment, tolerance, reality testing, control, planning, defense, synthesis of information, intellectual functioning, and memory. The ego separates out what is real. It helps us to organize our thoughts and make sense of them and the world around us. “The ego is that part of the id which has been modified by the direct influence of the external world. … The ego represents what may be called reason and common sense, in contrast to the id, which contains the passions”

Surely the issue is to [I]control [/I]the ego and not to destroy it. The enemy is surely the characteristics that an uncontrolled ego can [I]develop [/I]within us and not ego itself - characteristics like greed, pride, superiority, megalomania, fear, inferiority, laziness, lack of discipline, self-delusion, and so on - these are the enemies we should fight against.

In defence of Mr Toppel, I think it is important to read this book in the context of the public to whom he was addressing it and the fact that it was written over twenty years ago. Twenty years is not generally a very long period, but this particular 20 years since this book was created has seen abnormally huge changes in both how markets function and who are active in them. In particular, telecommuications, information technology and computer power have changed the entire face of trading compared with that of the 90’s. If one remembers that Mr Toppel’s career, and therefore his experience, stretches back a further twenty plus years even before this book was written, then it puts a different perspective on his thoughts.

So it is important maybe to focus on just the issues that are still relevant today and ignore those, such as his comments of charting and geometrics, which are perhaps less applicable in today’s environment.

Whilst traders may not nowadays enter markets because: “Uncle Joe gave us a hot tip that turned out to be an iceberg”, there are a lot of “Uncle Joe” equivalents in our trading world which do cause precisely the same end results. In addition, we certainly do suffer the same emotional obstacles such as fear and greed and self-delusion - and we most definitely suffer from the illusion that we can get-rich-quick-without-really-trying or simply by copying someone else who claims to be able to carry us there.

We also suffer from the same analytical problems such as picking tops and bottoms and betting against the trend, etc.

In these issues, there were some gems to be picked from this work…