Author and financial trader Daryl Guppy's latest book is based on the classic Chinese book The 36 Strategies of the Chinese, which is like a companion volume to Sun Tzu's much-quoted book The Art of War. Despite the English translations of the titles, The Art of War is actually about broad strategies, while The 36 Strategies of the Chinese gives specific tactics that can be used in different situations to achieve your strategic goal.

The 36 Strategies of the Chinese reads like a collection of amusing but rather obscure Chinese proverbs, such as "Hitting the grass to startle the snake" and "Removing the ladder after the enemy ascends the roof" plus a brief explanation of each strategy. Guppy goes a step further in The 36 Strategies of the Chinese for Financial Traders by giving us a modern explanation for each strategy, a description of its origins, a trader's translation, and several case studies illustrating how the strategy can be applied in financial trading.

Inevitably, the 36 strategies remind the reader of Machiavelli, with his dubious political strategies in which the end always justifies the means. Guppy comments that "deception lies at the heart of some of the 36 strategies." But overall he takes a neutral view of the strategies, describing them as ways to gain advantage from situations that are biased against us. He also reminds readers that "the use to which they are put delivers the moral and ethical content."

In exploring how these ancient strategies can be integrated into modern trading, Guppy considers two different "enemies" the market itself, and other traders. Consider strategy number 13, "Hitting the grass to startle the snake." This strategy arose during the Tang dynasty, and broadly means using loud and obvious methods to flush out the enemy's concealed intentions. But what does that mean for modern financial traders?

Guppy interprets the strategy by warning that "every trend, every support level, every resistance level is a suspicious clump of grass potentially concealing a snake." You can check whether there is a snake passively, by analysing market trends and rally data. Or you can actively place a small order just above the trend line to see whether other traders act on this signal.

Overall, The 36 Strategies of the Chinese for Financial Traders is an ingenious and informative analysis of how a too-frequently overlooked Chinese classic can be re-interpreted in a modern setting.

(China Daily 10/09/2006 page12)