Archives of “mark douglas” tag
rssKnow Yourself & Educate Yourself
Know yourself– Understand what style fits your personality. Can you hold a position for a few days or only a few hours? Are you okay with larger draw downs or can you only take small ones? Are you more comfortable trading pullbacks or breakouts? Most importantly, don’t try to use a style that doesn’t “fit” your personality.
Educate yourself – But don’t over educate yourself or fall into the trap of reading to many biographical trading books. They may be entertaining, but you will learn little about the current state of trading. Stick to my ”Holy Trinity” of books “How To Make Money In Stocks” by O’Neil, “The Disciplined Trader” by Mark Douglas, and “The StockTwits Edge” by Howard Lindzon. The rest you can learn from online trading communities and blogs.
Trading Quotes -The Disciplined Trader ,Mark Douglas
The market is never wrong in what it does; it just is. Therefore, you as an individual trader interacting with the market—first as an observer to perceive opportunity, then as a participant executing a trade, contributing to the overall market behavior—have to confront an environment where only you can be wrong, and it’s never the other way around. As a trader, you have to decide what is more important—being right or making money—because the two are not always compatible or consistent with one another…—-The Disciplined Trader,Mark Douglas
If, in fact, you can’t control or manipulate the markets and the markets have absolutely no power or control over you, then the responsibility for what you perceive and for your resulting behavior resides only in you. The one thing you can control is yourself. As a trader, you have the power either to give yourself money or to give your money to other traders.—-The Disciplined Trader,Mark Douglas
Mark Douglas’s Five Fundamental Truths
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.
Recommended Reading
1. How to Make Money in Stocks (by William J O’Neil)
This is the best stock market trading book ever written. It gives you an excellent blend of technical and fundamental analysis lessons based on what really works in the market. The strategies, methods and principles taught in this book are proven historically. This book covers a lot of ground and provides an excellent foundation to build your successful trading plan and begin your investment career.
2. Reminiscences of a Stock Operator (by Edwin Lefevre) 1923
An all time classic. This is the most widely read, highly recommended market trading book ever. Its certainly a must read for all investors, novice or experienced. Packed full of great trading knowledge. This book is full of market gems.
3. The Battle For Investment Survival (by Gerald Loeb) 1935
Another all time classic. Great trading wisdom can be extracted from this book. Learn to trade stocks from one of the best. Loeb is truly a market genius. Reading this book would be a great investment in your future as a trader or investor.
4. Market Wizards (3 books by Jack D. Schwager)
Three excellent books that feature interviews of the world’s greatest traders and investors. The books ask questions that traders and investors would love to ask these superstars of trading. The answers given are a fantastic wealth of knowledge. Covers the stock market, futures, options and most other trading venues in the investment world.
5. Lessons From the Greatest Stock Traders of All Time (by John Boik)
Five great stock market traders from various eras give you superb lessons on how to be a consistent winner. William J O’Neil, Gerald Loeb, Bernard Baruch, Jesse Livermore and Nicolas Darvis turn this book into a trading bible. Learn from the best and become a market superstar in the investment world. (more…)