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Kindle Notes & Highlights
by
Mark Douglas
Read between
February 13 - March 25, 2019
“could have,” the “should have,” the “would have,” and the “if only.”
If there’s a struggle, it is you who are struggling against your own internal resistance, conflicts, and fears.
The answer is: Learn to accept the risk.
Accepting the risk means accepting the consequences of your trades without emotional discomfort or fear.
You are perfectly satisfied to let the market do whatever it’s going to do.
However, as true as all of these possibilities are for every trader, what isn’t true or the same for every trader is what it means to be wrong, lose, miss out, or leave money on the table.
Not everyone shares the same beliefs and attitudes about these possibilities and, therefore, we don’t share the same emotional sensitivities.
This is where professional traders really separate themselves from the crowd. When you accept the risk the way the pros do, you won’t perceive anything that the market can do as threatening. If nothing is threatening, there’s nothing to fear. If you’re not afraid, you don’t need courage. If you’re not stressed, why would you need nerves of steel?
From the market’s perspective, it’s all simply information. It may seem as if the market is causing you to feel the way you do at any given moment, but that’s not the case.
If your goal is to be able to trade like the professionals, you must be able to see the market from an objective perspective, without distortion. You must be able to act without resistance or hesitation,
Thoughts are energy.
People see what they’ve learned to see, and everything else is invisible until they learn how to counteract the energy that blocks their awareness of whatever is unlearned and waiting to be discovered.
Using the same logic, a top trader would say that your fear is irrational because this “now moment” opportunity has absolutely nothing to do with your last trade.
Each trade is simply an edge with a probable outcome, and statistically independent of every other trade.
learn how to train his mind to stay properly focused in the “now moment opportunity flow.”
At the very core of one’s ability 1) to trade without fear or overconfidence, 2) perceive what the market is offering from its perspective, 3) stay completely focused in the “now moment opportunity flow,” and 4) spontaneously enter the “zone,” it is a strong virtually unshakeable belief in an uncertain outcome with an edge in your favor.
By preventing this association, they are able to keep their minds free of unrealistic and rigid expectations about how the market will express itself.
“Making yourself available”
perceptual blindness happens all the time in trading.
Because only the best traders consistently predefine their risks before entering a trade.
Only the best traders cut their losses without reservation or hesitation when the market tells them the trade isn’t working.
And only the best traders have an organized, systematic, money-management regimen for taking profits when the market goe...
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The typical trader doesn’t predefine his risk, cut his losses, or systematically take profits because the typical trader doesn’t believe it’s necessary.
The most effective and functional trading belief that he can acquire is “anything can happen.”
each individual hand played is statistically independent of every other hand.
This means that each individual hand is a unique event, where the outcome is random relative to the last hand played or the next hand played.
Here’s what makes thinking in probabilities so difficult. It requires two layers of beliefs that on the surface seem to contradict each other.
The degree of certainty is a function of how good the edge is.
As a result, it’s easier to stay focused on keeping the odds in their favor and executing flawlessly, which in turn makes them less susceptible to making costly mistakes.
the trader’s analytical tools are the known variables that put the odds of success (the edge) for any given trade in the trader’s favor, in the same way that the rules of the game put the odds of success in favor of the casino.
Casino operators have learned that all they have to do is keep the odds in their favor and have a large enough sample size of events so that their edges have ample opportunity to work.
This means that unless we train our minds to perceive the uniqueness of each moment, that uniqueness will automatically be filtered out of our perception.
When you’ve trained your mind to think in probabilities, it means you have fully accepted all the possibilities (with no internal resistance or conflict)
When you achieve complete acceptance of the uncertainty of each edge and the uniqueness of each moment, your frustration with trading will end.
you will no longer be susceptible to making all the typical trading errors that detract from your potential to be consistent and destroy your sense of self-confidence.
not defining the risk before getting into a trade is by far the most common of all trading errors, and starts the whole process of trad...
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Ordinarily, we would have no problem identifying or perceiving this pattern if it weren’t for the fact that the market was moving against our position.
But the pattern loses its significance (becomes invisible) because we find it too painful to acknowledge.
The trend doesn’t disappear from physical reality, but our ability to perceive it does.
It’s not until we are either out of the trade or out of danger that the trend becomes apparent, as well as all the opportunities to make money by trading in the direction of the trend.
our pain-avoidance mechanisms are just protecting us from information that would indicate that our expectations do not correspond with what is available from the environment’s perspective.
To experience the potential effects of information, whether negative or positive, requires an interpretation.
As traders, we can’t afford to let our pain-avoidance mechanisms cut us off from what the market is communicating to us about what is available in the way of the next opportunity to get in, get out, add to, or subtract from a position, just because it’s doing something that we don’t want or expect.
There is nothing at stake because there’s no expectation.
Without any mental boundaries, you will be making yourself available to perceive everything you’ve learned about the nature of the ways in which the market moves.
We have to be rigid in our rules and flexible in our expectations.
We need to be rigid in our rules so that we gain a sense of self-trust that can, and will always, protect us in an environment that has few, if any, boundaries. We need to be flexible in our expectations so we can perceive, with the greatest degree of clarity and objectivity, what the market is communicating to us from its perspective.
It's like what Ronny Kagen said about being attached to your activities or actions, but detached from the outcome.
To eliminate the emotional risk of trading, you have to neutralize your expectations about what the market will or will not do
The idea is to create a carefree state of mind that completely accepts the fact that there are always unknown forces operating in the market.
There will be similarities between the “now moment” and something that you know from the past, but those similarities only give you something to work with by putting the odds of success in your favor.
