O is for Observation

“The ABC’s of the Tao of Forex” series

观 — "To Observe, to Contemplate"

The tower sees what the battlefield cannot.

观 (Guān) is the name of Hexagram 20 of the I Ching, "Contemplation" or "Observation." The character depicts a bird (雚) with eyes wide open (見)—a creature perched high, watching the world below with calm, penetrating attention.

The hexagram describes a tower from which one can observe the land in all directions. The Image says: "The wind blows over the earth: the image of Contemplation. Thus the sage kings visited the regions of the world, contemplated the people, and gave them instruction." Observation is not passive staring. It is active, purposeful, panoramic awareness.

The Taoist Principle

Before action comes observation. This is a law of the Tao. The farmer observes the seasons before planting. The physician observes the patient before treating. The general observes the terrain before attacking. The trader observes the market before entering.

Most traders invert this. They act first (out of boredom, FOMO, or compulsion) and observe the consequences second. By the time they observe what they have done, the damage is already done. The Taoist trader inverts the inversion: observation always precedes action. If no clear observation has been made, no action is taken.

The Trading Application

Observation in trading has three levels:

1.  Pre-market observation: The panoramic scan. You are on the tower, looking at the whole landscape—which pairs are moving, which are still, where is the volatility, what is the dominant sentiment, what season of the Wu Xing are we in? No trade ideas yet. Just seeing.

2.  Setup observation: The focused gaze. You have identified a potential trade. Now you zoom in. You watch the price action at your level. You wait for the market to show you whether your setup is valid. You do not jump the gun.

3.  In-trade observation: The maintenance of awareness. You are in a position. You are watching for signs that the thesis is still valid or that it is beginning to fail. You are not obsessively refreshing your P&L. You are observing the market, not your account.

At all three levels, the quality of your observation determines the quality of your action.

The Daily Practice

At least once a month, schedule an "Observation Only" session. For the full duration of your usual trading window, you are not permitted to place a single trade. You are on the tower. Your only task is to watch, to take notes, to draw the hexagrams of the day in your journal.

At the end of the session, reflect: What did I see today that I would have missed if I had been busy trading?

Closing Mantra

‍ ‍"I climb the tower before I enter the battle. I see first. I act second."

This is one letter of the ABCs of The Tao of Forex—a 26-part journey through the ancient principles that transform trading from a struggle into a practice. Each letter stands alone, but together they form a complete path: from Alignment to Zenith.

If this resonated with you, save it. Sit with it. Let it find its way into your next session, your next trade, your next moment of stillness before the charts. The Dao does not rush, and neither should you.

Ready for the next letter?

© 2026 The Tao of Forex