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by
Mark Douglas
traders who have confidence in their own trades, who trust themselves to do what needs to be done without hesitation, are the ones who become successful. They no longer fear the erratic behavior of the market. They learn to focus on the information that helps them spot opportunities to make a profit, rather than focusing on the information that reinforces their fears.
The greater your confidence, the easier it will be to execute your trades.
The largest group of consistent losers is composed primarily of doctors, lawyers, engineers, scientists, CEOs, wealthy retirees, and entrepreneurs.
The winners have attained a mind-set—a unique set of attitudes—that allows them to remain disciplined, focused, and, above all, confident in spite of the adverse conditions. As a result, they are no longer susceptible to the common fears and trading errors that plague everyone else.
Learning to accept the risk is a trading skill—the most important skill you can learn.
The best traders aren’t afraid.
the source of our trading difficulties is internal, derived from our state of mind. Indeed, it seems much more natural to see the source of a problem as external,
the best way to avoid losses and become consistent would be to learn more about the markets. This bit of logic is a trap that almost all traders fall into at some point,
accept the possibility of an uncertain outcome,
market analysis is not the path to consistent results.
When you eliminate the potential to define market information in painful ways, you also eliminate the tendency to rationalize, hesitate, jump the gun, hope that the market will give you money, or hope that the market will save you from your inability to cut your losses.
trust yourself
trade without the slightest bit of fear,
Every child is curious.
we want to avoid responsibility.
it’s much easier to shift the responsibility by blaming the friend or the broker for their bad ideas.
Instead of learning to think like traders, they think about how they can make more money by learning about the markets.
Attitude produces better overall results than analysis or technique.
the more he learned, the less he took advantage of.
preventing pain by avoiding losses can’t be done. The market generates behavior patterns and the patterns repeat themselves, but not every time.
He’s no longer focused on just winning, but rather on how he can avoid pain by preventing the market from hurting him again.
the more he tries not to make a mistake, the more mistakes he makes.
It’s when you’re winning that you are most susceptible to making a mistake,
the solutions are in your mind and not in the market.
Winning and consistency are states of mind in the same way that happiness, having fun, and satisfaction are states of mind.
You can’t rely on the market to make you consistently successful, any more than you can rely on the outside world to make you consistently happy.
When you’re in the flow, you don’t have to try, because everything you know about the market is available to you. Nothing is being blocked or hidden from your awareness, and your actions seem effortless because there’s no struggle or resistance.
The best traders stay in the flow because they don’t try to get anything from the market;
fear is the source of 95 percent of the errors you are likely to make.
you will make errors, as long as you’re afraid that what you want or what you expect won’t happen.
The answer is: Learn to accept the risk.
If you can learn to create a state of mind that is not affected by the market’s behavior, the struggle will cease to exist.
The traders who break through the cycle and ultimately make it are the ones who eventually learn to stop avoiding and start embracing the responsibility and the risk.
if energy doesn’t take up any space; then it also could be said that we have an unlimited capacity for learning.
People see what they’ve learned to see, and everything else is invisible until they learn
your fear (or hesitation) about putting on the next trade, when your last trade was a loser? 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.
In each situation, the market generated the same signal.
a typical trader’s perception of the risk in any given trading situation is a function of the outcome of his most recent two or three trades (depending on the individual). The best traders, on the other hand, are not impacted (either negatively or too positively) by the outcomes of their last or even their last several trades.
focused in the “now moment opportunity flow.”
there are only two forces that cause prices to move: traders who believe the markets are going up, and traders who believe the markets are going down.
The best traders treat trading like a numbers game, similar to the way in which casinos and professional gamblers approach gambling.
They stay relaxed because they are committed and willing to let the probabilities (their edges) play themselves
In trading, the unknown variables are all other traders who have the potential to come into the market to put on or take off a trade.
Since all trades have an uncertain outcome, then like gambling, each trade has to be statistically independent of the next trade, the last trade, or any trades in the future,
all they have to do is keep the odds in their favor and have a large enough sample size of events so
“let go” of the need to know what is going to happen next or the need to be right on each trade.
trading doesn’t have anything to do with being right or wrong on any individual trade.
Our pain-avoidance mechanisms block our ability to define and interpret what the market is doing
if you still believe that trading is about analysis or about being right, then after a loss you will anticipate the occurrence of your next edge with trepidation, wondering if it’s going to work. This, in turn, will cause you to start gathering evidence for or against the trade.
You will gather evidence for the trade if your fear of missing out is greater than your fear of losing. And you will gather information against the trade if your fear of losing is greater than your fear of missing out.
