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

by Mark Douglas

I have worked with many experienced traders who have put together incredible winning streaks, sometimes going months without a losing day; having fifteen or twenty winning trades in a row is not unusual for them. But for the boom and busters, these streaks always end the same way—in huge losses that are the result of either euphoria or self-sabotage. If the losses are the result of euphoria, it really doesn’t matter what form the streak takes—a number of wins in a row, a steadily rising equity curve, or even one winning trade. Everyone seems to have a different threshold for when overconfidence or euphoria starts to take hold of the thinking process. However, the moment euphoria takes hold, the trader is in deep trouble. In a state of overconfidence or euphoria, you can’t perceive any risk because euphoria makes you believe that absolutely nothing can go wrong. If nothing can go wrong, there’s no need for rules or boundaries to govern your behavior. So putting on a larger than usual position is not only appealing, it’s compelling.