This Trading 'Bible' Will Change The Way You See The Market
The book Trading in the Zone by Mark Douglas is highly regarded by traders across the world, for its insight and detail on the subject of trading psychology. Mark is famous within the trading world and is currently the president of Trading Behaviour Dynamics, which delivers training programs to assist with trading psychology at financial institutions.
This unique insight into the psychology of trading makes this one of the best trading books available today and is arguably one of the most important trading books ever written. It has become apparent in recent years that the vast majority of retail traders lose money and fail due to poor trading psychology and the resulting lack of money management.
Lessons to be learnt
This book can teach traders a variety of lessons concerning money management, consistency and finding new levels of fulfilment and enjoyment from successful trades. The main lesson which traders can take away is learning how to understand the root cause of trading mistakes. Mark Douglas highlights that many poor trades are often made because of deep-rooted emotional issues, which influence a trader’s interactions in the market.
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During our childhood we all experience failure in different ways and we gradually learn to handle this feeling of hurt. Our upbringing leads to patterns which are so deeply woven into our psyche that we are unaware of the impact they create. An unsuccessful trade will inevitably feel like a failure and can quickly stir up negative feelings from our childhood, but this book will teach the coping mechanisms needed to avoid these negative emotions.
Psychology and successful trading strategies
In many cases, the feeling of failure can lead to traders chasing a trade, even if it's high risk and may result in a large financial loss. The book seeks to assist readers in adjusting their attitudes towards trading, so that it is possible to trade without fear or greed, leading to the elimination of reckless behaviour.
The book aims to help people trade in a way which is free of psychological impacts, where a loss is seen as a possible outcome rather than a failure. Mark Douglas comprehensively covers the processes required to help traders process the market with a clear, dispassionate viewpoint, which hopefully leads to making a profit.
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The five famous 'truths'
One of the most useful sections of the book covers his famous five 'truths' theory, which can be summarised as:
1) Anything is possible.
2) There is no need to know what will happen next to make a profit.
3) Wins and losses do not follow a pattern, they are randomly distributed.
4) An edge is an indication of a higher probability, it is never a certainty.
5) The market is unique at every moment.
Mark believes that once a trader accepts these truths, they are able to leave their psychological baggage behind. The advice is to choose your edge, stick to it and trade, so that over time the random distribution will at some point fall in your favour.
Are there any areas of improvement?
Here at Trading Education, we would advise every trader to read this book, but you should be prepared for a number of long-winded metaphors which are dotted throughout. If you are looking to take away the key points without spending too much time reading the full book, we would recommend reading the first seven chapters and then finishing with the final chapter, which pulls everything together. To find out more about trading techniques and strategies, please take a look at our blogs or contact our knowledgeable team.
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