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Trading in the Zone with these 12 steps

  
  Education
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The 5 Fundamental Truths of Trading:

1. Anything can happen.
2. You don’t need to know what is going to happen next to make money.
3. There is a random distribution between wins and losses for any given set of
variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing
happening over another.
5. Every moment in the market is unique.

The 7 Principles of Consistency:

1. I objectively identify my edges.
2. I predefine the risk of every trade.
3. I completely accept the risk or I am willing to let go of the trade.
4. I act on my edges without reservation or hesitation.
5. I pay myself as the market makes money available to me.
6. I continually monitor my susceptibility for making errors.
7. I understand the absolute necessity of these principles of consistent success
and, therefore, I never violate them.

12 Quotes From ‘Trading In The Zone

  
  Education
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I spent hours reading and re-reading this book, and eventually made a summary of all the key quotes.  In a series of posts I’ll be sharing these quotes with you, and hopefully they will inspire you to take your trading to the next level.  I hope you enjoy my first selections:    
1.  You will need to learn how to adjust your attitudes and beliefs about trading in such a way that you can trade without the slightest bit of fear, but at the same time keep a framework in place that does not allow you to become reckless.
2. Trading is an activity that offers the individual unlimited freedom of creative expression.
3. The unlimited characteristics of the trading environment require that we act with some degree of restraint and self-control, at least if we want to create some measure of consistent success.
4. The hard reality of trading is that, if you want to create consistency, you have to start from the premise that no matter what the outcome, you are completely responsible.
5. One of the principal reasons so many successful people have failed miserably at trading is that their success is partly attributable to their superior ability to manipulate and control the social environment, to respond to what they want.  (Unfortunately) the market doesn’t respond to control and manipulation (unless you’re a very large trader).
6. The tools you will use to create this new version of yourself are your willingness and desire to learn, fuelled by your passion to be successful.  Successful traders have virtually eliminated the effects of fear and recklessness from their trading.
7. Attitude produces better overall results than analysis or technique. (more…)

Just Be Yourself

  
  Education
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Success in all aspects of life seem to follow those who do not try to act like someone else, but rather have a foundation of knowing who they are and act in that manner.

Many traders seem to want to act like other traders who have recently had a string of successes instead of being committed to their own strategy and trading style.

To be the best we can and have consistent success in trading takes a devotion and passion to learning our strengths and weaknesses and applying our skills to match up with these understandings.

Whether you are a risk taker or very conservative, both styles can reap profits as long as the trading matches with that personality. Just be yourself and let the results take occur.

Trading for a living

  
  Education
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You’ve got to bring your A game to the table each and every day. There is no sitting in a cubicle playing solitaire, visiting with facebook friends, talking with others in the break room about fantasy football, etc. that is going to get the job done for you. Your efforts, whatever they may be, will be directly related to your bottom line returns!

  • Past success means absolutely nothing. You are only as good as your next trade, your next week, your next quarter, etc. In addition, what you do next always has the potential to unravel whatever success you’ve acquired previously. Few careers offer you the potential for self-destruction so quickly the way trading for a living provides.

  • The pressure to perform will create unbelievable amounts of negative stress and energy you’ll have to deal with daily. Most people don’t have to worry or fear that being wrong will cost them their paycheck. After all, just look at economists, bankers, and politicians!

  • There will be little to no respect or understanding for what you do for a living. People will assume you’re a “day trading gambler.” Or, in my view, which is even worse, many idiots will express the view that they could also “trade for a living” if they decided to. This is true even in by those who’ve shown no consistent success in the markets on a “part-time basis.”

  • Working in isolation you’ll often miss close human interaction and the lack of a competitive “team” like atmosphere. Also, building and holding outside friendships, especially for men later on in life, are often very difficult for those who don’t meet a lot of people through their jobs.

  • Sitting 12 hours a day every day at the computer will wreak havoc on your overall health and fitness. Many traders are overweight, have back issues, eyesight problems, etc.

  • Like many highly skilled professions it requires constant education & learning. In many, but not all careers, once you’ve acquired a certain amount of skills and knowledge, little more is expected of you. In trading, you’ve got to always be in learning mode. In addition, what you think you know right now and what is working for you, will not someday in the future. That’s the way of constant evolutionary state of the marketplace.

  • You’ve got to be a jack of all trades. I’ve often said that if trading was the only thing I had to do, my life would be a whole lot easier. Instead, independent traders must spend time serving as their very own tax accountant and tech support guru. In my view, there’s nothing worse than a hardware or software issue that takes you away from concentrating on the markets. (more…)

12 Quotes From ‘Trading In The Zone'

  
  Education
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1. Attitude produces better overall results than analysis or technique.

2. Positive winning attitude = expecting a positive result from your efforts, with an acceptance that whatever results you get are a perfect reflection of your level of development and what you need to learn to get better.

3. Winning in any endeavour is mostly a function of attitude.

4. Losing and being wrong are inevitable realities of trading.

5. The market has no responsibility towards the individual trader. Taking responsibility means acknowledging and accepting, at the deepest part of your identity, that you – not the market – are completely responsible for your success or failure as a trader.

6. If you perceive the endless stream of opportunities to enter and exit trades without self-criticism and regret, then you will be in the best frame of mind to act in your own best interest and learn from your experiences.

7.  You will need to learn how to adjust your attitudes and beliefs about trading in such a way that you can trade without the slightest bit of fear, but at the same time keep a framework in place that does not allow you to become reckless.

8. Trading is an activity that offers the individual unlimited freedom of creative expression.

9. The unlimited characteristics of the trading environment require that we act with some degree of restraint and self-control, at least if we want to create some measure of consistent success.

10. The hard reality of trading is that, if you want to create consistency, you have to start from the premise that no matter what the outcome, you are completely responsible.

11. One of the principal reasons so many successful people have failed miserably at trading is that their success is partly attributable to their superior ability to manipulate and control the social environment, to respond to what they want.  (Unfortunately) the market doesn’t respond to control and manipulation (unless you’re a very large trader).

12. The tools you will use to create this new version of yourself are your willingness and desire to learn, fuelled by your passion to be successful.  Successful traders have virtually eliminated the effects of fear and recklessness from their trading.

Trading in the Zone

  
  Education
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These Beliefs are the Seven Principles of Consistency from Mark Douglas’s “Trading in the Zone” I highly recommend picking this book up to add to your collection, because it has benefited me tremendously in understand how beliefs and values play a vital role in one’s trading and ultimate success.

I remember the first time I picked this book up I didn’t “get” it and put it away. About a year later I read it again and it just clicked. I now reference it on a weekly schedule just so the principles in the book stay fresh in my mind and to reinforce what I had learned.

I am a Consistent Winner Because:
1.  I objectively identify my edges.
2.  I predefine the risk in every trade.
3.  I completely accept the risk or I am willing to let go of the trade.
4.  I act on my edges without reservation or hesitation.
5.  I pay myself as the market makes money available to me.
6.  I continually monitor my susceptibility for making errors.
7.  I understand the absolute necessity of these principles of consistent success and , therefore, I never violate them.
Five Fundamental Truths: 
1. Anything can happen.
2. You don’t need to know what is going to happen next.
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.

Addional Mark Douglas Material in PDF form. (more…)

Mark Douglas makes some great statements

  
  Education
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In the book Trading In The Zone, Mark Douglas makes some great statements that I truly believe are important.  He states:

I AM A CONSISTENT WINNER BECAUSE:

  • I objectively identify my edges
  • I predefine the risk of every trade
  • I completely ACCEPT the risk or I am willing to let go of the trade
  • I act on my edges without reservation or hesitation
  • I pay myself as the market makes money available to me
  • I continually monitor my susceptibility for making errors
  • I understand the absolute necessity of these principles of consistent success and, therefor, I always follow them with confidence and joy.

What you’ll notice about his statements is that it is he is assuming that you have already done the first set of bullets up top; that you have already created a plan and you already have a set of RULES.  Now you might ask, how do I know if my set of rules now will work next month or next year? GREAT question. The market dates back all the way into the late 1700’s.  There is literally a few HUNDRED years of data.  That’s why I say that back testing is KEY.  Now that doesn’t mean that you need to back-test 200 years of data.  Not even close.  You want to back-test a reasonable time depending on your time-frame of trading.  For example, if I plan on trading based on a daily system, then I might back-test the last 5-6 years.  If I’m going to trade based on an intra-day 3 minute chart, I would probably backtest about a year.  There is no way to KNOW what is going to happen, but trading really boils down to probabilities.  Time and time again the same things tend to repeat themselves.  Why do you think the markets tend do to the same things over and over.  Why does it seem that certain stocks that are in the same class look the same from a chart perspective?  How come a company will report great quarterly results, but still go down? It’s because there is a greater number of traders that BELIEVE that this is where an equity is too much or too little.  Why do you think there are people who are talking about a “recession” right now?  Again, it’s because the same things seem to be occurring that did prior to a previous recession and people have that BELIEF.

So what does all this mean?  What can you gather from all this?  Well, a few things actually.  One is to make sure you create, find and organize a PLAN for trading.  Think about it as if you wanted to open up a company.  Do the research and find out how some of these traders got started and what they did.  Once you’ve done that, write down your plan and look at your questions from up top.  Once you can answer ALL of them, then you are moving toward being a consistently profitable trader.  Then take a look at what Mark Douglas wrote.  You have to own these statements mentally.  You have to truly believe that you are a consistent winner because of all of the statements above.

Remember, you are starting a business, and if you want your business to succeed, you need to have a PLAN!

“Plan your trade, and trade your plan” – Anonymous

Trading Wisdom

  
  Education
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THE 5 FUNDAMENTAL TRUTHS OF TRADING:

 1. Anything can happen.
2. You don’t need to know what is going to happen next to make money.
3. There is a random distribution between wins and losses for any given set of
variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing
happening over another.
5. Every moment in the market is unique.

THE 7 PRINCIPLES OF CONSISTENCY:

 
1. I objectively identify my edges.
2. I predefine the risk of every trade.
3. I completely accept the risk or I am willing to let go of the trade.
4. I act on my edges without reservation or hesitation.
5. I pay myself as the market makes money available to me.
6. I continually monitor my susceptibility for making errors.
7. I understand the absolute necessity of these principles of consistent success
and, therefore, I never violate them.

Mark Douglas :Quotes

  
  Education
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page 121

1) Anything can happen

2) You don’t need to know what is going to happen next in order to make money.

3) There is a random distribution between the wins and losses for any given set of variables that define an edge.

4) An edge is nothing more than an indication of a higher probability of one thing happining over another.

5) Every moment in the market is unique.

Page 185

I AM A CONSISTENT WINNER BECAUSE:

1) I objectively indentify my edges.

2) I predefine the risk of every trade.

3) I completely accept the risk or I am willing to let go of the trade.

4) I act on my edges without reservation or hesitation.

5) I pay myself as the market makes money available to me.

6) I continually monitor my susceptibility for making errors.

7) I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them.

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