Lessons from the past

Lessons from the past

Reviewed by Gurmeet Kaur

`THE 36 Strategies of the Chinese for Financial Traders,’

* By: Daryl Guppy

* Publisher: John Wiley & Sons Inc

* Pages: 515

* Price: RM59.50

FOR a long time now, business people have been turning to ancient Chinese strategies to guide them in their corporate planning and strategies. These strategies are timeless and can be adapted to different situations with the goal to win from the `enemy’ and gain victory. We have all heard of Sun Tzu’s The Art of War, where the Chinese military leader’s advice in matters of war for emperors and generals – which was originally inscribed on bamboo strips around 500 BC – has the strength of timeless wisdom.

Darly Guppy, in his book, The 36 Strategies of the Chinese for Financial Traders, explores how ancient Chinese strategies can be integrated into modern financial trading.

Guppy, an active private trader in equity and derivatives markets, writes that `in the (financial) market we are always under attack and we always try to take the offensive to wrest profits from a market that is skilled in withholding them. These strategies apply when you are under attack, or when you wish to defend yourself by taking offensive action.’

The book is a compilation of political and military strategies dating back more than 1,800 years ago. It is drawn from classic Chinese poetry, history, philosophy, biographies, and novels such as The Romance of the Three Kingdoms. According to the author, these strategies were first collated around 400 years ago.

As the title suggests, it has 36 chapters divided into groups of six, which underpin Chinese business behaviour. However, Guppy is quick to point out that the strategies outlined in this book bear little relationship to the material in The Art of War, which he says lacks the broader philosophical and political basis found in The 36 Strategies of the Chinese.

More importantly, the book is about trading techniques. It includes specific methods for trading in the market, including reading the order line information, understanding the behaviour of market makers and integrating news events into price activity.

Charting or technical analysis is not discussed, although many of the strategies are based on these trading approaches. Neither is the book about investing, although many of the strategy examples may be used to improve exit and entry points.

In the final analysis, this book should be read not for its details on the strategies, but for the wider thinking to encourage one to understand the strategic context of action in the financial markets. As Guppy puts it aptly, `Trading tactics are personal, and the best books are written by those who trade and know the taste of fear. This cannot be an armchair analysis based on carefully constructed assumptions. Real trading reduces academic theories to tatters as the market creates conditions that challenge theory and practice. I learnt the application of these strategies the hard way – in the market. I have been a victim of some of these strategies.’

Guppy, incidentally, is a regular contributor to trading and investment publications in Singapore and Malaysia.

Copyright 2006

Provided by ProQuest Information and Learning Company. All rights Reserved.