Archives of “fundamental truths” tag

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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.

The 5 Fundamental Truths Of Trading

  
  Education
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If you hold these core trading beliefs you will tend to do well in trading:
I. “Anything can happen” – the market can go up, down or sideways from any point and negate my edge;
II. “You Don`t need to know what is going to happen next in order to make money”
III. “To win in the markets you need an edge” – an edge is nothing more than an indication of a higher probability of one thing happening over another
IV. “There is a random distribution between wins and losses for any set of variables that define an edge”
V. “Every moment in the market is unique” – so the last trade is independent from the next

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…)

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’s Five Fundamental Truths

  
  Education
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1.       Anything can happen.  Translated – you have no control over the market.

2.       You don’t need to know what’s going to happen next in order to make money.  You don’t need to be psychic, or try to predict the market.  This is not to say that you cannot predict what the market will do next and be correct, only that you don’t have to, and that by trying to predict you shackle yourself to ‘the need to be right’ and the associated ball and chain.

3.       Wins and losses are random – You will never know when a trade will be a winner in advance, only that the conditions that define your edge are present.

4.       Your edge is nothing more than a higher probability of one thing happening over another.  Your edge is no guarantee of a winning trade, just of winning over time.

5.       Every moment in the market is unique.  Just because a similar trade won last time does not mean it will this time, and by treating each trade as totally unique you can see the truth of the trade without relating it to ‘what happened last time’.

These beauty in these theories is that they take the emphasis off any one trade, and turn your trading into a big picture endeavour.

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