ZF Capital » Mark Douglas

Thought of the Day (June 14, 2010)

ElfLord — Sun, 13 Jun 2010 21:49:00 +0000

The more sophisticated you become as a trader, the more you will realize that trading is completely mental. It isn’t you against the markets, it’s just you. All the other traders participating to make the market provide you with an opportunity to make money from their divergent beliefs about the future. If people didn’t disagree about the future value of any particular commodity or stock, then there would be nothing to compel them to either bid a price higher or offer it lower, and the opportunity to profit from these changes would cease to exist. So the markets just offer the individual trader opportunity.

– Mark Douglas, The Disciplined Trader

Thought of the Day (May 19, 2010)

ElfLord — Tue, 18 May 2010 21:28:15 +0000

The markets don’t owe you anything (regardless of how hard you work to be successful) because every other trader participating is doing so to take your money away. You and you alone are completely responsible for whatever you end up with. The sooner you accept that responsibility (if you haven’t already), the easier it will be to identify what skills you need to learn to interact with the markets more successfully. Even if you can’t identify the mental components responsible for what you ended up with, at least by assuming that you are responsible, you will be opening yourself up to find out.

– Mark Douglas, The Disciplined Trader

Thought of the Day (May 7, 2010)

ElfLord — Thu, 06 May 2010 21:09:11 +0000

Certainly one could argue that some traders lose because they don’t understand enough about the markets and therefore they usually pick the wrong trades. As reasonable as this may sound, it has been my experience that traders with losing attitudes pick the wrong trades regardless of how much they know about the markets. In any case, the result is the same– they lose. On the other hand, traders with winning attitudes who know virtually nothing about the markets can pick winners; and if they know a lot about the markets, they can pick even more winners.

– Mark Douglas, Trading in the Zone

Thought of the Day (May 4, 2010)

ElfLord — Mon, 03 May 2010 21:04:19 +0000

All of us are in a position of having to pick and choose environmental information because we can’t be aware of everything at once. If you pick and choose market information on the basis of having to justify your beliefs, you are putting yourself at an extreme disadvantage. You will be excluding from your awareness information that may be more indicative of the consistency of the market and its potential to move in any given direction.

– Mark Douglas, The Disciplined Trader

Thought of the Day (April 28, 2010)

ElfLord — Tue, 27 Apr 2010 21:10:24 +0000

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.

– Mark Douglas, The Disciplined Trader

Thought of the Day (April 16, 2010)

ElfLord — Thu, 15 Apr 2010 21:48:54 +0000

As traders, we cannot afford the luxury of wishing and hoping because it puts us in a passive relationship with the markets. When we wish and hope, we are shifting responsibility on to the markets for making something happen instead of confronting the conditions and doing something about it ourselves. If we find ourselves wishing and hoping, it is an excellent indication that we don’t know what is going on and as a result need to get out of the markets until we do.

– Mark Douglas, The Disciplined Trader

Thought of the Day (April 13, 2010)

ElfLord — Mon, 12 Apr 2010 21:43:54 +0000

Think about the number of times you’ve looked at a proice chart and said to yourself, ‘Hmmm, it looks like the market is going up (or down, as the case may be),’ and what you thought was going to happen actually happened. But you did nothing except watch the market move while you anguished over all the money you could have made.

There’s a big difference between predicting that something will happen in the market (and thinking about all the money you could have made) and the reality of actually getting into and out of trades. I call this difference, and others like it, a ‘psychological gap’ that can make trading one of the most difficult endeavors you could choose to undertake and certainly one of the most mysterious to master.

– Mark Douglas, Trading in the Zone

Thought of the Day (March 13, 2010)

ElfLord — Fri, 12 Mar 2010 21:46:12 +0000

There is a tremendous difference between focusing on money and focusing on using your trading as an exercise to identify what you need to learn. The first will cause you to focus on what the markets are giving you or are taking away from you. The second perspective causes you to focus your attention on your ability to give yourself money. With the first perspective, you are placing some of the responsibility onto the markets to do something for you. With the second perspective, you assume all the responsibility.

– Mark Douglas, The Disciplined Trader

Thought of the Day (March 11, 2010)

ElfLord — Wed, 10 Mar 2010 21:40:46 +0000

Once you learn to identify patterns and read the market, you find there are limitless opportunities to make money. But, as I’m sure you already know, there can also be a huge gap between what you understand about the markets, and your ability to transform that knowledge into consistent profits or a steadily rising equity curve.

Think about the number of times you’ve looked at a price chart and said to yourself, “Hmmm, it looks like the market is going up (or down, as the case may be),” and what you thought was going to happen actually happened. But you did nothing except watch the market move while you anguished over all the money you could have made.

There’s a big difference between predicting that something will happen in the market (and thinking about all the money you could have made) and the reality of actually getting into and out of trades. I call this difference, and others like it, a “psychological gap” that can make trading one of the most difficult endeavors you could choose to undertake and certainly one of the most mysterious to master.

– Mark Douglas, Trading in the Zone

Thought of the Day (January 29, 2010)

ElfLord — Thu, 28 Jan 2010 21:44:51 +0000

Statistics and society may predict, but you alone determine whether you will succeed or fail. You alone are in control; take responsibility for your performance and your life. There are always tremendous opportunities in the markets. It is not what happens; it is what you do with what happens that makes the difference between profit and loss.

– Mark Douglas, The Disciplined Trader: Developing Winning Attitudes

Thought of the Day (December 18, 2009)

ElfLord — Thu, 17 Dec 2009 21:46:12 +0000

The first step on the road toward getting your mind and the market in sync is to understand and completely accept the psychological realities of trading. This step is where most of the frustrations, disappointments, and mysteriousness associated with trading begin. Very few people who decide to trade ever take the time or expend the effort to think about what it means to be a trader. Most people who go into trading think that being a trader is synonymous with being a good market analyst.

As I have mentioned, this couldn’t be further from the truth. Good market analysis can certainly contribute to and play a supporting role in one’s success, but it doesn’t deserve the attention and importance most traders mistakenly attach to it.

– Mark Douglas, Trading in the Zone

Thought of the Day (December 11, 2009)

ElfLord — Thu, 10 Dec 2009 21:10:42 +0000

What you believe 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.

The point here is that right and wrong as you may traditionally think of them don’t exist in the market environment. Academic credentials, degrees, reputations, even a high I.Q. don’t make you right in this environment as they would in society. Traders, acting on their belief in the future by putting on a trade, are the only force that can act on prices to make them move. Movement creates opportunity to make money, and making money is what trading is all about.

– Mark Douglas, The Disciplined Trader

Thought of the Day (November 30, 2009)

ElfLord — Sun, 29 Nov 2009 21:49:34 +0000

Market information is only threatening if you are expecting the market to do something for you. Otherwise, if you don’t expect the market to make you right, you have no reason to be afraid of being wrong. If you don’t expect the market to keep going in your direction indefinitely, there is no reason to leave money on the table. Finally, if you don’t to expect to be able to take advantage of every opportunity just because you perceived it and it presented itself, you have no reason to be afraid of missing out.

– Mark Douglas, Trading in the Zone

Thought of the Day (November 28, 2009)

ElfLord — Fri, 27 Nov 2009 21:46:17 +0000

If you want to change your experience of the markets from fearful to confident, if you want to change your results from an erratic equity curve to a steadily rising one, the first step is to embrace the responsibility and stop expecting the market to give you anything or do anything for you. If you resolve from this point forward to do it all yourself, the market can no longer be your opponent. If you stop fighting the market, which in effect means you stop fighting yourself, you’ll be amazed at how quickly you will recognize exactly what you need to learn, and how quickly you will learn it. Taking responsibility is the cornerstone of a winning attitude.

– Mark Douglas, Trading in the Zone

Thought of the Day (November 15, 2009)

ElfLord — Sat, 14 Nov 2009 21:41:46 +0000

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. If he knows exactly what he is going to do and under what conditions, then he would have something by which to measure his performance, thus making himself accountable to himself. This is exactly what most traders don’t want to do, preferring instead to keep their relationship with the market somewhat mysterious.

This creates a real psychological paradox for traders, because the only way to learn how to trade effectively is to make oneself accountable by creating structure: but, with accountability comes responsibility.

– Mark Douglas, The Disciplined Trader: Developing Winning Attitudes

Thought of the Day (September 30, 2009)

ElfLord — Tue, 29 Sep 2009 22:26:47 +0000

The best traders can put on a trade without the slightest bit of hesitation or conflict, and just as freely and without hesitation or conflict, admit it isn’t working. They can get out of the trade — even with a loss — and doing so doesn’t resonate the slightest bit of emotional discomfort. In other words, the risks inherent in trading do not cause the best traders to lose their discipline, focus, or sense of confidence.

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. This is a big problem, because to whatever degree you haven’t accepted the risk is the same degree to which you will avoid the risk. Trying to avoid something that is unavoidable will have disastrous effects on your ability to trade successfully.

– Mark Douglas, Trading in the Zone

Thought of the Day (September 20, 2009)

ElfLord — Sat, 19 Sep 2009 21:01:36 +0000

It’s when you’re winning that your are most susceptible to making a mistake, overtrading, putting on too large a position, violating your rules, or generally operating as if no prudent boundaries on your behaviour are necessary. You may even go to the extreme of thinking you are the market. However, the market rarely agrees, and when it disagrees, you’ll get hurt. The loss and the emotional pain are usually significant. You will experience a boom, followed by the inevitable bust.

– Mark Douglas, Trading in the Zone

Thought of the Day (September 9, 2009)

ElfLord — Wed, 09 Sep 2009 08:12:48 +0000

It’s the ability to believe in the unpredictability of the game at the micro level and simultaneously believe in the predictability of the game at the macro level that makes the casino and the professional gambler effective and successful at what they do. Their belief in the uniqueness of each hand prevents them from engaging in the pointless endeavor of trying to predict the outcome of each hand. They have learned and completely accepted the fact that they don’t need to know what’s going to happen next. More importantly, they don’t need to know in order to make money consistently.

Because they don’t have to know what’s going to happen next. They don’t place any special significance, emotional or otherwise, on each individual hand, spin of the wheel, or roll of the dice. In other words, they’re not encumbered by unrealistic expectations about what is going to happen, nor are their egos involved in a way that makes them have to be right. As a result, it’s easier to stay focused on keeping the odds in their favor and executing flawlessly, which in turn makes them less susceptible to making costly mistakes. They stay relaxed because they are committed and willing to let the probabilities (their edges) play themselves out, all the while knowing that if their edges are good enough and the sample sizes are big enough, they will come out net winners.

The best traders use the same thinking strategy as the casino and professional gambler. Not only does it work to their benefit, but the underlying dynamics supporting the need for such a strategy are exactly the same in trading as they are in gambling. A simple comparison between the two will demonstrate this quite clearly.

– Mark Douglas, Trading in the Zone

Thought of the Day (August 4, 2009)

ElfLord — Tue, 04 Aug 2009 08:36:24 +0000

The effects of fear on one’s behavior are obvious, limiting one to the point of complete immobility. If you can’t execute your trades properly, even when you perceive the most perfect opportunity, it is because you have not released yourself from the pain contained in the memories of past trading experiences and because you still don’t trust yourself to act appropriately in any given set of conditions. If you did, there would be no fear or immobility.

– Mark Douglas, The Disciplined Trader

Thought of the Day (July 27, 2009)

ElfLord — Mon, 27 Jul 2009 08:05:30 +0000

Before anyone can become successful in an environment with the unstructured character of the trading environment, one needs to develop a supreme sense of self-confidence and self trust. I am defining self-confidence as an absence of fear and self-trust: knowing what to do at the moment when it needs to be done, and then doing it without hesitation.

– Mark Douglas, The Disciplined Trader

Thought of the Day (July 10, 2009)

ElfLord — Fri, 10 Jul 2009 07:18:39 +0000

One of the many contradictions of trading is that it offers a gift and a curse at the same time. The gift is that, perhaps for the first time in our lives, we’re in complete control of everything we do. The curse is that there are no external rules or boundaries to guide or structure our behavior. 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. The structure we need to guide our behavior has to originate in your mind, as a conscious act of free will. This is where many problems begin.

– Mark Douglas, Trading in the Zone