Trading in the Zone: Master the Market with Confidence, Discipline, and a Winning Attitude

by Mark Douglas

The instant you either decide or assume you know what’s going to happen next, you will automatically expect to be right. However, what you know, at least at the rational level of thinking, can only take into consideration your unique past, which may not have any relationship to what is actually happening from the market’s perspective. At that point, any market information that is not consistent with your expectation has the potential to be defined and interpreted as painful. To avoid experiencing the pain, your mind will automatically compensate, with both conscious and subconscious pain-avoidance mechanisms, for any differences between what you expect and what the market is offering. What you will experience is commonly referred to as an “illusion.” In a state of illusion, you are neither objective nor connected to the “now moment opportunity flow.” Instead, you become susceptible to committing all the typical trading errors (hesitating, jumping the gun, not predefining your risk, defining your risk but refusing to take the loss and letting the trade turn into a bigger loser, getting out of a winning trade too soon, not taking any profits out of a winning trade, letting a winning trade turn into a loser, moving a stop closer to your entry point, getting stopped out and watching the market trade back in your favor, or trading too large a position in relationship to your equity).