"Trading in the Zone"

Beginner Questions
1

Hi all.
I just wanted to shoot this out there. I’ve been around the market for a little over 2 yrs now. And I have always heard from time to time of the importance of the psychology aspect, in trading. “Sure, I’ll get around to it, when I finally get a good trading system in place” . And I’ve heard from many of you in here (the veterans) about this book as a must read, “Trading in the zone”.
Well, I bought it. And am reading it now.
WHAT A BOOK!!! I should have done this FIRST!!
This IS a must read. And just keep getting blown away by what Mark Douglas is saying.
You know, I can go on and on about this, cause it’s so very vital as traders to be thinking this way, and not the way we have been brought up as humans.

So…if anyone out there shares my sentiment about this book, can you tell us?

And for you brand new ones that have just come aboard, I URGENTLY advise you to find a copy and read it.
This will help you tremendously in your trading.
Cause, it’s not finding the holy grail of strategies that will get you there,(being a consistent profitable trader), but MORESO, being freed up from the natural emotional tendencies that hold us back from becoming successful in the market.

That’s what I think.

You?

Mike

2

Thank you…

3

Hey Mike,

So I think i’ll grab a copy of this book, What has it helped you with so far, Patience i know is my BIGGEST problem, always wanting to enter and exit to early, not waiting for the right entry time/signals. I’ll share more as I read the book.

Happy trading,

Jason

4

Hi Jason.

What has helped me so far…these are the things I have been constantly thinking about (from the book).

"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. …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 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. "

So, I’ve been thinking about the winning attitude. For me…it’s like shooting pool (billiards). I’m really good at it. And I can play with absolute confidence. Not with a big head. No matter who I play against. I know I can win. And when it all looks like I will lose…I’m not at all afraid. Because of the confidence I have in my ability to come back in just one turn. I’m never scared of losing. Even if I do, so what, let’s play again. I WILL beat you. And in the long run, I just know I will be on top. The longer we play, the more chances you will see what I’m made of. It’s all about confidence. I have so much confidence and a winning attitude it’s not even funny. I don’t even need to brag anymore, cause I just will win. And that’s the proof.

Also I’ve been thinking a lot about accepting the risk. And I mean really absorbing that fact. Immersing myself into the notion that it’s gonna happen, and when I do lose, I will learn what I need to know about…the market, my strategy, etc…But it won’t be because of my emotions (my goal anyway).

Hope this helps some.
I’m so on a journey.
And this is very very exciting.
Cause I am learning that the psychology aspect of it is so vitally important. And if I can change anything…it’s myself!!

Mike

5

Thank you Mike!
Excellent info, I feel the same, For me it was Patience I needed to learn to have a ton of it! I kept finding a reason to say that it wasn’t my fault when i lost a trade and that the market was just being weird that day. Now i know that I was making mistakes and I needed to LEARN from them and adjust my system accordingly. So far so good! I’ll try to keep up with the book and post the knowledge i gain!

Happy trading,

Jason

6

I fully agree with you, Mike, “trading in the zone” is an eye opener. If you have to read only one book about forex, read this one. Everything else you may find for free on different forums or blogs. :21:

7

“There isn’t anything about trading that is more central to your success and also more misunderstood than the concept of [I]accepting the risk[/I]. Most traders erroneously assume that because they are engaged in the inherently risky activity of putting on and taking off trades, they are also accepting that risk. I will repeat that this assumption couldn’t be further from the truth.”

“I am offering you a specific thinking strategy composed of a set of beliefs that will keep you focused, in the moment, and in the flow. With this perspective, you will not be trying to get anything from the market or to avoid anything. Rather, you will let the market unfold and you will make yourself available to take advantage of whatever situations you define as opportunities.”

“When you make yourself available to take advantage of an opportunity, you don’t impose any limitations or expectations on the market’s behavior. You are perfectly satisfied to let the market do whatever it’s going to do.”

"This is where professional traders really separate themselves from the crowd. When you accept the risk the way the pros do, you won’t perceive anything that the market can do as threatening. If nothing is threatening, there’s nothing to fear. If your not afraid, you don’t need courage. If you’re not stressed, why would you need nerves of steel? And if you’re not afraid of your potential to get reckless, because you have the appropriate monitoring mechanisms in place, then you have no need for self-control. As you contemplate the implications of what I am saying, I want you to keep something in mind: Very few people who go into trading start out with the appropriate beliefs and attitudes about responsibility and risk. We start out carefree, then become scared, and our fears continually diminish our potential. The traders who break through the cycle and ultimately make it are the ones who eventually learn to stop avoiding and start embracing the responsibility and the risk. "

8

Here’s a link to a good youtube of Mark Douglas - MIND OVER MARKET (Full length Interview)

YouTube :wink:

9

I first started reading forex books 5 years ago. I remember that three were really outstanding…Trading in the zone and The Disciplined trader both by Mark Douglas and Steve Nissons Japanese candle sticks(Boss book). That’s a solid foundation to build on Psychology wise. Looking back now those books are still valuable but they don’t make a difference at all unless through dedication you live out what the books are trying to teach you which is basically all market experience.

10

" If there is such a thing as a secret to the nature of trading, this is it:
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,” it is a strong virtually unshakeable belief in an [I]uncertain[/I] outcome with an edge in your favor. "

" The best traders have evolved to the point where they believe, without a shred of doubt or internal conflict, that “anything can happen”. They don’t just suspect that anything can happen or give lip service to the idea. Their belief in uncertainty is so powerful that it actually prevents their minds from associating the “now moment” situation and circumstance with the outcomes of their most recent trades. "

"For the most part, a typical trader’s perception of the risk in any given trading situation is a function of the outcome of his most recent two or three trades (depending on the individual). "
"The best traders, on the other hand, are not impacted (either negatively or too positively) by the outcomes of their last or even their last several trades. "

11

I have read Mr Douglas’s book, it is well researched and written as indeed are those written by Mr Van Tharp.

Steve Nisson brought us the Japanese candle, his work is very much worthy of study.

In the olden days I used to discount the pyscho guys - I still, in a way, discount them, but in a good way.

For me, (remember, my psyche only) when the market becomes almost boring, that’s not really the correct word, the positive word - when the market becomes interesting but not exciting then it seems to do what I expect that it might do.

The anything can happen is not even thought about, yet sure it is there, but I side-line that negative and cast it into a SL.

Mike’s quote is right, no fear (no.1 enemy,) no overconfidence,(I re-name greed and no.2 enemy) - just acceptance that in the upcoming week there is a good probability of a rise in the Euro - if it happens then I will be aboard, if not then that’s that.

12

Hi everyone.
Thanks Peter for your input on how this mentality has become yours.
And that’s what I want to through out there. Has anyone been changed (if you read the book and adopted the change in thinking) by these truths? I would love to hear some testimonies how you were to how you are now. How has this thinking really changed your way of trading?
I would like to start a journal here, on this thread, on how I will be changing with this new mindset.
(First of all, I don’t have anyone to talk to, in the real world) (And this is the only place where people would understand me).
So, I’m gonna start noting the whole metamorphosis development, of my mindset in here.
I have such a strong conviction and belief that this (contents of the book) is what’s needed to be a consistent and successful trader. And I will not rest until my mind has become transformed into this method of thinking.

So, thanks in advance for listening (no one else will).
And here we go.

I’m gonna start off with what’s presently going through my mind.

From this quote.
"The idea is to create a carefree state of mind that completely accepts the fact that there are always unknown forces operating in the market. When you make these truths a fully functional part of your belief system, the rational part of your mind will defend these truths in the same way it defends any other belief you hold about the nature of trading. It’s a contradiction to believe that each trade is a unique event with an uncertain outcome and random in relationship to any other trade made in the past; and at the same time to believe you know for sure what will happen next and to expect to be right. "

As I have placed some trades this morning, everything I’ve been learning is going through my mind.
I say this to myself… I want to have hope that this will go my way. But, I don’t want to expect it to go that way, in which it will cause emotional pain. Because of a truth about the market, in which every trade will have an uncertain and random outcome. So then, what kind of mindset should I have? Hope for the best? Don’t care attitude? Expect nothing? Surely not rooting for it, cause that will stir up emotions, with expectations.
Then it hit me. And this came to mind. The definition of a winning attitude is this…Having a positive expectation of 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 do better.
So, then, I trade the plan. And whatever the outcome will be, I should accept it as nothing but a positive thing. Good or bad. I guess it just will tell me that that’s where I’m at. And of course whether my plan is good, needs improvement, or needing adjustment. Plus the fact that I need to remember that the whole point is to find the edge regarding a pool of trades. Meaning it’s not the one trade that makes it or not, it’s the culmination of many trades. The edge is over time. Like the casino’s. They don’t care about each individual thing going on, (the edge is with the person short term, but with them in the long term) but they sure do care about all the numbers added up, and over time.
I just got so used to rooting for my trades. And it was emotional, to some extent. And now, I’m learning that we just have to wait and see how it turns out. I always had hope. And the end result of hope always turned out to be either for a good feeling, or a bad feeling. And it did affect me one way or the other.
But, I guess I need to realize that the emotions will cause me to misread the market. And I think that’s the whole point of this mindset. Seeing the market so objectively and from it’s own perspective.

I got to run.

Will be continuing this.

Mike

13

"For your mind to be open to a true exchange of energy, you can’t be in a state of knowing or believing that you already know what’s going to happen next. When you are at peace with not knowing what’s going to happen next, you can interact with the market from a perspective where you will be making yourself available to let the market tell you, from it’s perspective, what is likely to happen next. At that point, you will be in the best state of mind to spontaneously enter "the zone, " where you are tapped into the “now moment opportunity flow.”

I think I’m starting to get it. In my mind.
There is a difference between recognizing what outcomes will become on the next very tick, than what will be an outcome given a large sample size. See, he keeps saying that we just DO NOT KNOW what the market will do next. It’s such a random event. And I have struggled with that. I mean, look at the GBP lately. We all can see what’s going on. There is a flow now with them. Is that such a random event? Well, it sure does not seem like it. The fundamental aspect seems to be driving all participants to make it move nothing but up. So, I just have been scratching my head with the idea about what I have been learning lately. Random events.
So, I’m trying to distinguish between what the market has said, and not what is it going to say.
I’m keeping my mind in tune with the fact of what has happened, as opposed to thinking what is going to happen.
On a daily basis.

Mike

14

" If you asked me to distill trading down to its simplest form, I would say that it is a pattern recognition numbers game. We use market analysis to identify the patterns, define the risk, and determine when to take profits. The trade either works or it doesn’t. In any case, we go on to the next trade. It’s that simple, but it’s certainly not easy. In fact, trading is probably the hardest thing you’ll ever attempt to be successful at. That’s not because it requires intellect, quite the contrary! But because the more you think you know, the less successful you’ll be. Trading is hard because you have to operate in a state of not having to know, even though your analysis may turn out at times to be “perfectly” correct. To operate in a state of not having to know, you have to properly manage your expectations. To properly manage your expectations, you must realign your mental environment so that you believe without a shadow of a doubt in the five fundamental truths. "
…

  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 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.
15

I red this book, truly a good starting point for a beginner and I’d definitely recommend it

16

My eye opening book was Zurich axioms!

17

[B]Observe yourself [/B]

"The first step in the process of creating consistency is to start noticing what you’re thinking, saying, and doing. Why? Because everything we think, say, or do as a trader contributes to and, therefore, reinforces some belief in our mental system. Because the process of becoming consistent is psychological in nature, it shouldn’t come as a surprise that you’ll have to start paying attention to your various psychological processes. "

So, when I first read this I was excited. Because I was already in the action of doing that very thing.
It only makes sense to be in touch with your thoughts about what’s going on in the market, the feelings that arise as a result of what my trades do.
See, I am taking this very serious. I do believe in the psychological aspect of trading. It just all makes sense. So I take stock in what I am presently feeling, and how different (or if their changing) they are from how a professional trader would feel.
One thing I have been noticing a lot lately is how I want to always be right. And of course that is so natural. Everyone wants to be right. But when I entertain those thoughts, that leads to NOT BEING OBJECTIVE about the market. It would be MY take of the market, instead of IT’S PERSPECTIVE.

I guess my goal is to become more and more objective.

Mike

18

Well, I have completed the book. (last week sometime)
So, now, am thinking to myself, now what? Within myself I just don’t feel complete. And I know why.
It’s because of what the author is really saying. The whole entire point of what he is saying is that I need a complete change of mind. And I’m not there yet. I need a metamorphosis. It’s how I am supposed to be thinking when I look at the charts, think of my trading plan, making decisions, …like everything! And what is so natural to us humans (emotional beings) is so contrary to what the best in this business have developed. And I understand it will come in one of 2 different ways. The first would be nothing but experience. Years of trial and error. And I suppose that those who are truly professional have become that way because their minds have figured it out, after much pain and suffering, over a lot of time. And the other way (his point in the book) is to be transformed. And that takes a lot of work. It’s replacing our natural feelings with some fundamental market truths, that eventually makes us think, see, and feel differently. And I guess the whole point is to see the market objectively. What is the market really saying. It’s point of view.
But, what makes it so difficult for me is my passion to become successful. And that naturally leads to me wanting to be right. And THAT leads to hopes and expectations. And expectations leads to emotions. Which will get me off track and not see the market objectively.
See, I care. I care about if I’m on the right track. Is my ‘edge’ good enough? Can it get better? But, according to him, it’s not about how much you know about the market that will get you there. And if there’s anything that hit me hard about the contents of this book, it’s that fact. The more you know, the more you should become successful. Well, he says that’s nonsense. Because it’s a random outcome on each and every tick. Just like the casino’s. The best we can do is play the probability game.
" You don’t need to know what is going to happen next in order to make money. Why? Because there is a random distribution between wins and losses for any given set of variables that define an edge. In other words, based on the past performance of your edge, you may know that out of the next 20 trades, 12 will be winners and 8 will be losers. What you don’t know is the sequence of wins and losses or how much money the market is going to make available on the winning trades. This truth makes trading a probability or numbers game. When you really believe that trading is simply a probability game, concepts like right and wrong or win and lose no longer have the same significance. As a result, your expectations will be in harmony with the possibilities."

Ok. That’s nice.
All I know is that I want to change. And I just will not quit until I have become changed. And I know I will when my trading becomes relatively consistent. And I progressively am getting better and better, in my business.
This is very exciting to me!
…whoa…emotional…I know…
Well, as long as I let go and watch it all happen, then I will be fine.
I absolutely will make it.
As long as I play the game correctly.

P.S. I plan on continuing this ‘captains log’. Cause in the future I want to look back and see the change.
Thanks for listening.

Mike

19

I’m just here to log some updates. About myself, as a result of my transformation progress.

I know I am changing.

When I view the market now a days, I don’t get too excited as I used to ( a much lesser degree than I used to for sure). The thing that always runs through my mind, and I keep reminding myself, is the fact of the unpredictable nature of the market. I believe it is true. That is a fact in my mind that’s going deeper and deeper. So that in turn changes the way I trade. In a more concrete way that that has changed me is this way. I have changed ALL of my charts to the weekly time frames. That just makes so much sense to me. Sure, I like to see what’s going on in the market from time to time during the day. But now I will see it all in the context of how the week is progressing. Fundamentally I do believe that the further out you go the more reliable the trends are. And I thought I would never think that the daily time frames go by so quickly, and also change so much! I think they do now. I would get all bent out of shape to see something rise or drop and think that the trends are changing (even on the daily), then to just come back around and continue the way it was going. This all is for the reason of how I can trade. I can’t day trade because of a full time job. So it’s placing trades only once a week.

Another thing I’ve been thinking a lot about (because of some of the stuff I read on BabyPips) is this.
I’M SO GLAD I HAVEN’T GONE LIVE YET. Before I read this book.
I just can’t imagine not having this mindset before going live. This is such vital stuff. And like I have mentioned previously, every good trader figures it all out, one way or another. I’m trying to get there via the short cut (the metamorphosis, than years of experience).
So, since this is MY thread, I’m gonna talk about where I am coming from regarding the demo/live debate.
Look…I must be different than all the rest. I have heard ALL of the sides of it. (And I know one of you who is such a staunch supporter of real money than fake money…‘The LastBear’.) (I will always respect you, even though we are on opposite sides of this coin) But, where I’m coming from, is that I will absolutely not go live until my system, strategy, business is fully developed, and have a track record of consistent results. And I’m not talking about becoming rich on paper first, but at least better than break even results for a length of time (at least for 6 months). See, I’m a numbers guy. I love nothing more than seeing the stats on paper add up to success. And I know I can’t realistically say this, but I believe that I will be more excited about seeing success on paper, than real money entering my hands. That reminds me of a conversation I had with my wife just the other day. We played the lottery, cause the pot is climbing pretty high. And I honestly said, and I do know this is true inside of me, that if we would win, and we had never to worry about money again, I would still spend hours and hours doing what I do. Because I love it so much, and it really isn’t about how much money I would get out of it, but moreso about becoming successful at something. The self satisfaction of having my own business. And figuring out how to win in the market (the thing that not a lot of ‘common’ people can do easily). So, anyway, back to the demo thing. In my mind, it’s the only smart thing to do. And I know what your all going to say right about now. “It’s the psychological difference between demo and live”. I realize what’s important to people. It’s money! And that’s why people get into this business, to make money. So, yes, with such a primitive mindset, there would be such a big difference between trading with virtual money than your hard worked for, real money. But, I’m not in that camp. I’m in this for the business. I’m in this because it has been born in me to reach success for something that I love (numbers, stats, strategies, problem solving issues, puzzles). And also I absolutely love that there’s a psychological aspect to it. Because you just can’t be a dummy, and someone who has no self control over his emotions and expect to be successful at this game. I will consider myself lucky to have picked up this book. This was definitely the missing link for me that I need on this road. And I absolutely will be transformed into this thinking that is necessary (which is all noted in the previous posts).
I’m not that young anymore to be able to waste years of my life learning things the hard way. (trial and error time and time again) In fact, the older I do get, the more serious I take things. And this book has taught me in the way I need to think. And I will not rest until I have become this way (objectively viewing the market, trading without any conflict, accepting everything the market does, realizing that all my decisions and all outcomes will be positive). So what I look at is my numbers, results, and now, my emotions, along with the correct market thinking. Things are changing. And it IS cause for excitement.

I just cannot wait till I go live, I’m hoping before the end of the year or beginning in Jan. I will give such a post about my true feelings before and after going live. But, the bottom line will be about becoming successful. And if it’s really true about the psychological element being most important aspect of trading, then, I’m gonna be so dog-gone successful it won’t even be funny.

And by the way…it’s awesome that my trading strategy is really starting to produce results now also.
It’s like all things are coming together for me.
But, only time will tell.

Mike