Book Review: The Art of the Trade

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A scene from The Dream of the Red Chamber (紅樓夢) painted by Xu Baozhuan.

The Art of the Trade: What I Learned (and Lost) Trading the Chicago Futures Markets by Jason Alan Jankovsky (Oct 6, 2008)

Aside from the classics (e.g., Livermore, Darvas), good trading books are hard to find. A good book tells it like it is. It engages the reader. And most importantly, it provokes thought. This book does all three.

Thought can be dangerous because if done correctly, it can put one’s entire life into question. Mr. Jankovsky argues that most people will lose in the markets precisely because they are incapable of radical self-critique. And yet, it is the market itself as “nothing more than a mirror (23)” that puts hard questions to participants in ways that, if correctly answered through self criticism and discipline, may lead to unimagined success.

Mr. Jankovsky writes:

The true reality of trading and the markets as a whole is something that most people would rather die than accept. Market reality only functions one way, but we bring a personal definition to the table when we trade. We are trying to make sense of what we perceive, and the only basis we have …is our previous world and life views, perspectives and belief structures. The end result is that we as traders ‘see’ the market differently than everyone else,  but the market itself is only functioning one way and will never be any other way. So, the true state of trading reality is in conflict with what we personally think it is. We can choose to define it any way we want. It’s the definition that creates gains or losses (23).

Mr. Jankovsky argues that the 80-90% of the participants who fail in the markets cannot adjust their minds to account for the fact that the charts are telling them that most investors get slaughtered, including themselves. They can’t see beyond their hopes and fears, and because these emotions are irrelevant to the market itself, they then turn to teachers, gurus, conspiracy theories, and the gods. In other words, they form herds.

Mr. Jankovsky’s narrative and reflection is most compelling because he went through the hells that brutal failure can bring. Lucky for traders, we are spared our lives long enough to buy ourselves low and struggle for renewal. Alas, 80-90% nonetheless sell low; they kill themselves, become drug addicts, or return to the daily grind of employment and home.

Mr. Jankovsky overcomes the capacity to delusion through the constant recognition that all human interactions are rife with or have the potential for conflict. This conflict finds expression in the market, and the only way to find one’s way is to consider why or how it is that others could think the way they do. The big bucks are made by contrarians with insight into others.

Because I can create reality anyway I choose, I decided to let everyone else show me what they think it is and then be part of that as a participant, without forming any reality on my own to compare it with. Therefore, all realities are mine, all possibilities are mine, and that can be anything. I walk the whole of life and anything it can offer you is already mine. I am the razor’s edge (73).

With this knowledge and capacity to adjust– which he calls “the meaning of life”– Mr. Jankovsky has been able to devise his own market tactics, his own sense of market rhythm, and his own capacity to profit. I hope that all traders would attempt to find their own logic, but everything tells me, as it has told Mr. Jankovsky, they do not.

We learn very little about the author’s methods in the book, except that he castigates most technical and fundamental analysis as contemporary alchemy. He is a tape reader. In this sense, he falls within the tradition of Jesse Livermore, who– when at his best– would stand silently in his office and watch the ticker tape or go off fishing. In either case, his ideas came from meditation on price action and human predilections.

There a number of incongruities in his book and life that I have noticed from quick research. Throughout the book he shows little patience for teachers of trading; for the art is not so easily learned as the professors of market hope suggest. And yet, Mr. Jankovsky is currently engaged in precisely that: teaching Forex trading at theliononline.net, where for a fee he allows students to “mirror” his own trades.  Do these students now see themselves or Mr. Jankovsky?

In a lengthy and generous E-mail, Mr. Jankovsky replies: 

I would like to offer one clarification if I may—I don’t “teach FOREX trading”. That is a common misconception based on a cursory review of my website. I trade for my own accounts and offer people many options to leverage my experience into their own. If they would like me to show them what I have come to know—I do that for a fee….but most people I talk to don’t qualify or disqualify themselves during the time it takes to get to know them and their trading problems. Trading is not “teachable”. I would encourage you to read a book titled “Zen and the Art of Archery” (if you haven’t already). I think that book sheds the proper light on the teacher/student relationship (because there isn’t one)… I show people what I have learned and they can do what they will with that knowledge. I have had only one “student” this whole year so far…I am not in this business to “teach” anything nor do I expect to be. I trade first. Everything else is second. My hope was to raise awareness for the true nature of the markets hopefully creating a better environment for everyone who is going to lose their trading stake very quickly anyway. I have come to understand that most “students” are going to miss the point completely and end up a net loser from their trading experience. No amount of education, training, mentoring or coaching will prevent that because you can’t “get it” unless your mind is ready to adapt. I decided not to frustrate myself any longer and I just wait for the students to show up; if they ever do. 

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