Typical trader is caught in a psychological trap of

refusing to plan and create structure for his

trading activity, so that he can avoid taking
responsibility for his results.
Trading in the zone
• If I had to distill all of the reasons down to one, I would simply say that the best
traders think differently from the rest.
• If you are unable to trade without the slightest bit of emotional discomfort
(specifically, fear), then you have not learned how to accept the risks inherent in
trading
• I've worked with countless traders who would spend hours doing market analysis
and planning trades for the next day Then, instead of putting on the trades they
planned, they did something else
• This is a classic example of how we become susceptible to unstructured, random
trading—because we want to avoid responsibility
• 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.
• Each trade is simply an edge with a probable outcome, and statistically
independent of every other trade.
• If you believe otherwise, then I can see why you're afraid; but I can
assure you that your fears are completely unfounded. As you can see,
one person's perception of risk can easily be perceived as irrational
thinking by another. Risk is relative, but to the person who perceives it in
the moment, it seems absolute and beyond question.
• This is a classic example of how we become susceptible to unstructured,
random trading—because we want to avoid responsibility
• The consistency you seek is in your mind, not in the markets
• What makes trading so fascinating and, at the same time, difficult to learn
is that you really don't need lots of skills; you just need a genuine winning
attitude.
• Everyone else to one degree or another assumes they are taking
responsibility; but the reality is that they want the market to do it for them.
The typical trader wants the market to fulfill his expectations, his hopes,
and dreams.
• 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
• Taking responsibility is the cornerstone of a winning attitude.
• CONSISTENCY: A STATE OF MIND
• Your state of mind is a by-product of your beliefs and attitudes
• People see what they want to see
• Each trade is simply an edge with a probable outcome, and statistically
independent of ever
• At the very core of one's ability
1)to trade without fear or overconfidence,
2) perceive what the market is offering from its perspective,
3)stay completely focused in the "now moment opportunity flow," and
4) spontaneously enter the "zone,".
• By making yourself available, you consciously open yourself up to find out
what will happen next; instead of giving way to an automatic mental
process that causes you to think you already know.
• Adopting this perspective leaves your mind free of internal resistance that
can prevent you from perceiving whatever opportunity the market is
making available from its perspective (its truth).
• Your mind is open for an exchange of energy. Not only can you learn
something about the market that you previously didn't know, but you also
set up the mental condition most conducive to entering "the zone.“
• The zone is a mental space where you are doing more than just reading the
collective mind, you are also in complete harmony with it
• Traders frequently ignore the fact that they may have to adapt in order to
become consistently successful traders
• Only the best traders cut their losses without reservation or
hesitation when the market tells them the trade isn't working. And
only the best traders have an organized, systematic, money-
management regimen for taking profits when the market goes in
the direction of their trade
• Not predefining your risk, not cutting your losses, or not
systematically taking profits are three of the most common—and
usually the most costly—trading errors you can make.
• Most important, by establishing a belief that anything can happen,
he will be training his mind to think in probabilities
• This means that each individual hand is a unique event, where the
outcome is random relative to the last hand played or the next hand
played have learned and completely accepted the fact that they don't
know what's going to happen next.
• More important, they don't need to know in order to make money
consistently
• What factors will determine whether the market unfolds in the
direction of his edge or against it? The answer is: the behavior of other
traders!. No control
• At the micro level, they believe that each trade or edge is unique.
• Although few would admit it, the truth is that the typical trader wants
to be right on every single trade.
• We have to be rigid in our rules and flexible in our expectations
• This truth makes trading a probability or numbers game
• When you find it, your state of mind will make it seem as if everything
is exactly as it was the last time. The problem is that, from the
market's perspective, it is not the same. As a result, you are setting
yourself up for disappointment. What separates the best traders from
all the rest is that they have trained their minds to believe in the
uniqueness of each moment (although this training usually takes the
form of losing several fortunes before they "really" believe in the
concept of uniqueness
• 1. Build the self-trust necessary to operate in an unlimited environment.
• 2. Learn to flawlessly execute a trading system.
• 3. Train your mind to think in probabilities (the five fundamental truths).
• 4. Create a strong, unshakeable belief in your consistency as a trader.
• all psychological in nature
• The first step in the process of creating consistency is to start noticing
what you're thinking, saying, and doing.
• What separates the "consistently great" athletes and performers from
everyone else is their distinct lack of fear of making a mistake
• Now, the sole purpose of trading mechanically is to transform yourself
into a consistently successful trader
• If there's enough force behind our resolve, it's possible to experience a
major shift in our mental structure virtually instantaneously
• 1. I objectively identify my edges.
• 2. I predefine the risk of every trade.
• 3. I completely accept 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.
Disciplined trader book
• Trading is 80 percent psychological and 20 percent one's methodology, be it
fundamental or technical
• Start slowly. Question every trade. What motivated it? How was the trade managed?
Was it successful? Why? Did you lose? Why? Write down your assessment and refer to
your comments before making your next trade.
• In the trading environment, you will have to make up your own rules and then have
the discipline to abide by them.
• In unstructured character of the trading environment, one needs to develop a supreme
sense of self-confidence and self-trust.
• Either in the beginning or at some point early in their trading career, all traders
experience confusion, frustration, anxiety, and the pain of failure. The few-traders who
pass through this phase to accumulate wealth are those who eventually confront and
work through some very difficult psychological issues about what it means to be a
trader, and this process of realization and change normally takes several years, even
for the best of them
• I am making here is that the process of change that took place was in the
mental environment and psychological makeup of each individual trader;
the markets didn't change, the tools that were used didn’t change, the
trader did
• For a trader, effort can be irrelevant, and there is virtually no relationship
between time and reward.
• Changing ourselves would seem like the absolute last resort as a solution to
any problem
• What you believed about value and your reasons for believing it may be of
highest quality, but if the market doesn't share your belief, it doesn't really
matter how "right" you are based on your superior reasoning process or
what you believe to be the quality of your information, because prices are
going to go in the direction of the greatest force
• This is very much different from the market environment where you can
be a passive loser. Once you put on a trade, you have to actively
participate to end your losses. You don't need to do anything to continue
to lose, and the market could go against your position indefinitely
• The market can't take anything away from you that you don't allow; if you
lost money or lost more than you intended to risk, you gave your money
to other traders
• In an unstructured and unlimited environment, it is essential that you
establish rules to guide your behavior.
• The typical trader will do most anything to avoid creating definition and
rules because he does not want to take responsibility for the results of his
trading.
• When you plan your trades in advance, you are putting your vision of the
future and creative abilities on the line, so to speak, and making yourself
accountable to yourself
• typical trader is caught in a psychological trap of refusing to plan and
create structure for his trading activity, so that he can avoid taking
responsibility for his results.
• And by doing so, he is subjecting himself to being tossed around by
the whims of the crowd, at the mercy of his own unrestrained
impulses, finding himself in winning and losing positions, not knowing
why or what to do next.
• Taking responsibility is a function of self-acceptance
• This sense of self-valuation is, in fact, the most important
psychological component of success and will override all others in
• determining your results.
• To prevent these blind spots in our perception, we have to learn to
trade without fear. And to trade without fear we need to completely
trust ourselves to confront and accept whatever information the
market is offering about itself
• The capability to reason beyond our current set of limitations (beliefs,
painful memories, and erroneous associations) or use our
imaginations creatively is the one compensating force that allows us
to grow, improve, and evolve beyond the painful and destructive life
cycles that we get caught in, both as individuals and as a culture.
• want to point out here that the "objective observer" doesn't care one
way or the other; she would just be looking for signs and
opportunities.
• The reason why a bull market is ready to turn into a bear market
when the general public gets involved is because the general public
has the least tolerance for risk and consequently needs the most
reassurance and confirmation that what they are doing is a sure thing
• The public gets stuck because they weren't willing to take the risk
when there was still potential for the market to move
• You and you alone are completely responsible for whatever you end
up with.
• To be a successful trader you need to trade without fear
• Therefore, these missed opportunity trades have the potential to
cause more anxiety and stress than the trades we actually do take
that turn out to be losers
• What is most important is that you make a firm commitment to your
education as a trader.
• So even though you can't actually control the market's movement,
you can learn how to control your perception of the market's
movement in a way that allows you the maximum objectivity.
Learning to perceive objectively will
• increase your ability to let the market tell you when to get in and
when to get out.
• Stay focused on what you need to learn, do the work that is
necessary, and your belief in what is possible will naturally expand as
a function of your willingness to adapt
• Perception and execution are separate skills.
• To be able to execute your trading systems properly, you will need to incorporate two concepts into your mental
framework—thinking in terms of probabilities and correlating the numbers or the mechanics of your system to
the behavior
• The market doesn't make you right, you make yourself right.
• Typical trader obsessed with outcome- professionals on process
• Trading without fear is a psychological skill
• primary skill for consistency
• In fear, we perceive information in painful way
• Important
• Trading methodology - or edge
• Plan - Risk, profit and size
• Execution without error
• Think in terms of probability
• Sincere, desire and clarity -change happens automatically
• Each trade is a different trade
• Don’t connect between two trades. Big Players may be different, pattern may be
same
 Paul Jone
• If you have a losing position that is making you uncomfortable, the solution is
very simple: Get out, because you can always get back in. There is nothing
better than a fresh start.
• Don't be a hero. Don't have an ego.
• Play great defense, not great offense
• I handle losing streaks by trimming down my activity. I just wait it out. Trying
to trade during a losing streak is emotionally devastating. Trying to play
"catch up" is lethal
• Take action -Delay is the worst thing you can do when trying to accomplish a
goal
• You are also accountable for your inaction
• Getting Angry does not get a anywhere