Mercenary Creed

I. Thou Shalt Heed the Price Action.
II. Thou Shalt Respect the Risk.
III. Monitor Thy Equity Curve.
IV. Thou Shalt Go For the Jugular.
V. Thou Shalt Focus on Making Money.
VI. Thou Shalt Go Short as Well as Long.
VII. To Thine Own Self Be True.

I. Thou Shalt Heed the Price Action.

The seasoned trader knows that “prices move first, fundamentals come second.” Conviction is my ally, intution my guide — yet only price confirms and validates. I know that charts, in essence, are simple abstractions… a complex interplay of forces, reduced to two dimensions in a tightly defined space. As a Mercenary I walk the middle path, heeding price action without deferring to it.

II. Thou Shalt Respect the Risk.

When I was a child, I traded as a child, not giving proper respect to risk. But now I am a Mercenary, and so now I trade like a Mercenary, giving risk its proper due. My trading capital is my life force; like an aviator’s fuel or an ocean diver’s air supply, I shall monitor it with passion and precision. First I shall survive, for only then can I thrive; as Sun Tzu instructed, I shall wait by the side of the river for the bodies of my enemies to float by. In respecting the risk, I shall continue on as my enemies falter… and in surviving my opportunities shall multiply.

III.. Monitor Thy Equity Curve.

The Mercenary respects the wisdom of his forebears. As such I pay heed to the oldest wisdom of all: When trading poorly, decrease risk and exposure; increase risk and exposure when trading well. I will maintain a constant vigilance over critical aspects of emotion and performance: How I am feeling; how I am trading; how attuned I am to the rhythm of the market; and, most vitally, whether my precious capital reserves are waxing or waning. In this I shall trade at my biggest when doing my best, trade at my smallest when doing my worst, and prosper through the great long stretch of days.

IV. Thou Shalt Go For the Jugular.

In monitoring my equity curve I shall ‘earn the right to swing’. Like Babe Ruth I shall retain the capacity for grand slams; like Ted Williams I shall “wait for a good pitch to hit.” When profits are strong and opportunity is great, I shall emulate the palindrome and maximize my good fortune to the hilt. The gambler takes foolishly outsized or unwarranted risks, while the grinder stays forever miniscule. As neither gambler nor grinder, but Mercenary, I shall trade patiently and carefully at all times, respecting risk all the while… and then, when the time is right, I shall take a defined portion of my gains and knock the #$#@ing cover off the ball.

V. Thou Shalt Focus on Making Money.

The fool cares more about being “right” than making money, and cocktail party glory is the soothsayer’s deep desire. I leave such foolishness to the chattering classes, cultivating instead a ruthless focus on making money. I shall feel no attachment to the “big call,” no hesitation in the urge to change my mind, and above all else no love for the position. Ego is indulgence and indulgence costs money; for the Mercenary, to be “right” means nothing while profit means everything. P&L is my Alpha and Omega, risk-adjusted return my northern star.

VI. Thou Shalt Go Short as Well as Long.

The Mercenary embraces that old trading truth, “There is only one side to the stock market… not the bull side or the bear side, but the right side.” As a flexible market participant, I shall cultivate the talent and the temperament to prosper in all market environments — up, down or flat. I shall transcend the tyranny of the “long-only” mentality, and shut my ears to institutionalized helplessness. I shall know the mountains and the valleys, going long or short with ease — always remembering that “the wolf careth not, how many the sheep be.”

VII.. To Thine Own Self Be True.

As Polonius instructed Laertes, I so instruct myself: “To thine own self be true.” The Mercenary lives unburdened and unyoked, free from troublesome earthly masters; I take my living from the markets as a fisherman takes from the sea. I will embrace this extraordinary freedom, and with it an extraordinary responsibility… the responsibility to live life to its fullest. I will travel where I wish, do what I choose, live in the manner I see fit, and support the causes near and dear to me; in word and deed I shall be free, an encouraging example for my fellow men in chains.