Mark Douglas – Trading in the Zone
Mark Douglas knyga Trading in the Zone – tai pirmoji skaityta knyga apie prekiavimo psichologiją. O gal geriau reikėtų sakyti, kaip psichologija veikia mūsų prekybinius sprendimus ir kodėl. Ji padeda ne tik surasti klaidingų sprendimų priežastis, bet ir pateikia konkrečius žingsnius, ką reikia daryti, norint šių klaidų išvengti.
Trumpai tariant, ši knyga nei apie fundamentalią, nei apie techninę analizę, o apie “mental” analizę. Ji tikrai verta dėmesio. Ypač jei manote, kad daugelis Jūsų prekybinių klaidų kyla ne dėl analizės stokos, o dėl tam tikrų psichologinių problemų, vidinės harmonijos nebuvimo.
Ar ją vertą skaityti nuo pradžių iki galo? Kas labai neturi laiko, siūlymas būtų perskaityti bent paskutinį skyrių, nes jame praktiškai pateikiame visa esmė. Taip pat žemiau pateikiamos įdomiausios iškarpos iš šios knygos, kurios padės susidaryti įspūdi, apie ką ji iš tikrųjų yra.
Trading in the Zone citatos
“Ninety-five percent of the trading errors you are likely to make—causing the money to just evaporate before your eyes – will stem from your attitudes about being wrong, losing money, missing out, and leaving money on the table. What I call the four primary trading fears.”
“When you’re convincing yourself that you’re right, what you’re saying to yourself is, “I know who’s in this market and who’s about to come into this market. I know what they believe about what is high or what is low. I know each individual’s capacity to act on those beliefs (the degree of clarity or relative lack of inner conflict), and with this knowledge. I am able to determine how the actions of each of these individuals will affect price movement in its collective form a second, a minute, an hour, a day, or a week from now.“
“To eliminate the emotional risk of trading, you have to neutralize your expectations about what the market will or will not do at any given moment or in any given situation. You can do this by being willing to think from the markets perspective.“
“To think in probabilities, you have to create a mental framework or mind-set that is consistent with the underlying principles of a probabilistic environment. A probabilistic mind-set pertaining to trading consists of 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.“
“What I’ve discovered is that, at the most fundamental level, there is a problem with the way we think. There is something inherent in the way our minds work that doesn’t fit very well with the characteristics shown by the markets. Those traders who have confidence in their own trades, who trust themselves to do what needs to be done without hesitation, are the ones who become successful. They no longer fear the erratic behavior of the market. They learn to focus on the information that helps them spot opportunities to make a profit, rather than focusing on the information that reinforces their fears.”
“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.”
“The largest group of consistent losers is composed primarily of doctors, lawyers, engineers, scientists, CEOs, wealthy retirees, and entrepreneurs. Furthermore, most of the industry’s best market analysts are the worst traders imaginable.”
“The best traders think differently from the rest. The defining characteristic that separates the consistent winners from everyone else is this: 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. As a result, they are no longer susceptible to the common fears and trading errors that plague everyone else.”
“This mind-set has a number of components, but the bottom line is that successful traders have virtually eliminated the effects of fear and recklessness from their trading.”
“That’s what the great athletes have: a winning attitude that allows them to easily move beyond their mistakes and keep going.”
“When you look at your relationship with the market from this perspective, you could say that your purpose is to extract money from the markets. But, by the same token, the market’s sole purpose is to extract money or opportunity from you.”
“If your goal is to be able to trade like the professionals, you must be able to see the market from an objective perspective, without distortion. You must be able to act without resistance or hesitation, but with the appropriate amount of positive restraint to counteract the negative effects of overconfidence or euphoria.”
“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 uncertain 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.”
“If he already knows, then there’s really no reason to adhere to these principles. Believing, assuming, or thinking that “he knows” will be the cause of virtually every trading error he has the potential to make (with the exception of those errors that are the result of not believing that he deserves the money).”
“Any expectation about the markets behavior that is specific, well-defined, or rigid—instead of being neutral and open-ended—is unrealistic and potentially damaging. I define an unrealistic expectation as one that does not correspond with the possibilities available from the market’s perspective. If each moment in the market is unique, and anything is possible, then any expectation that does not reflect these boundary-less characteristics is unrealistic.”
“What casino owners, experienced gamblers, and the best traders understand that the typical trader finds difficult to grasp is: even that have probable outcomes can produce consistent results, if you can get the odds in your favor and there is a large enough sample size. The best traders treat trading like a numbers game, similar to the way in which casinos and professional gamblers approach gambling.”
“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 individual hand. They 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.”
“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.”
“On the other hand, why do you think unsuccessful traders are obsessed with market analysis. They crave the sense of certainty that analysis appears to give them. Although few would admit it, the truth is that the typical trader wants to be right on every single trade. He is desperately trying to create certainty where it just doesn’t exist. The irony is that if he completely accepted the fact that certainty doesn’t exist, he would create the certainty he craves: He would be absolutely certain that certainty doesn’t exist. When you achieve complete acceptance of the uncertainty of each edge and the uniqueness of each moment, your frustration with trading will end. Furthermore, you will no longer be susceptible to making all the typical trading errors that detract from your potential to be consistent and destroy your sense of self-confidence.”
“Defining and interpreting information is a function of what we assume we know or what we believe to be true. If what we know or believe is in fact true—and we wouldn’t believe it if it weren’t—then when we project our beliefs out into some future moment as an expectation, we naturally expect to be right. When we expect to be right, any information that doesn’t confirm our version of the truth automatically becomes threatening. Any information that has the potential to be threatening also has the potential to be blocked, distorted, or diminished in significance by our pain-avoidance mechanisms.”
“You just can’t expect to be right. And if you are right, you can’t expect that whatever you did that worked the last time will work again the next time, even though the situation may look, sound, or feel exactly the same.”
“As unnatural as it seems to do so, you can’t let some previous experience (either negative or extremely positive) dictate your state of mind. If you do, it will be very difficult, if not impossible, to perceive what the market is communicating from its perspective. When I put on a trade, all I expect is that something will happen. Regardless of how good I think my edge is, I expect nothing more than for the market to move or to express itself in some way. However, there are some things that I do know for sure. I know that based on the markets past behavior, the odds of it moving in the direction of my trade are good or acceptable, at least in relationship to how much I am willing to spend to find out if it does.”
“The best traders are in the “now moment” because there’s no stress. There’s no stress because there’s nothing at risk other than the amount of money they are willing to spend on a trade. They are not trying to be right or trying to avoid being wrong; neither are they trying to prove anything. If and when the market tells them that their edges aren’t working or that it’s time to take profits, their minds do nothing to block this information. They completely accept what the market is offering them, and they wait for the next edge.“
“Anything can happen. Why? Because there are always unknown forces operating in every market at every moment, it takes only one trader somewhere in the world to negate the positive outcome of your edge. That’s all: only one. Regardless of how much time, effort, or money you’ve invested in your analysis, from the market’s perspective there are no exceptions to this truth. Any exceptions that may exist in your mind will be a source of conflict and potentially cause you to perceive market information as threatening.”
“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. (See number 3.) 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.”
“An edge is nothing more than an indication of a higher probability of one thing happening over another. Creating consistency requires that you completely accept that trading isn’t about hoping, wondering, or gathering evidence one way or the other to determine if the next trade is going to work. The only evidence you need to gather is whether the variables you use to define an edge are present at any given moment.”
“When you completely accept the psychological realities of the market, you will correspondingly accept the risks of trading. When you accept the risks of trading, you eliminate the potential to define market information in painful ways. When you stop defining and interpreting market information in painful ways, there is nothing for your mind to avoid, nothing to protect against.”
“Simply put, the truth is a function of whatever works in relation to what we are trying to accomplish at any given moment.”
“To think in probabilities, you have to believe that every moment in the market is unique, or more specifically, that every edge has a unique outcome. When you believe at a functional level that every edge has a unique outcome (meaning that it’s a dominant belief without any other beliefs arguing for something different), you will experience a state of mind that is free of fear, stress, and anxiety when you trade. It really can’t work any other way. A unique outcome is not something we have already experienced, therefore it is not something we can already know.”
“When you believe that you don’t know what is going to happen next, what exactly are you expecting from the market? If you said “I don’t know,” you are absolutely right. If you believe that something will happen and that you don’t need to know exactly what that something is to make money, then where is the potential to define and interpret market information as threatening and painful? If you said “There is none,” you are absolutely right again.”
“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 die 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.”
“The first stage is the mechanical stage. In this stage, you: 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.”
“Once you have completed this first stage, you can then advance to the subjective stage of trading. In this stage, you use anything you have ever learned about the nature of market movement. There’s a lot of freedom in this stage. So you will have to learn how to monitor your susceptibility to make the kind of trading errors that are the result of any unresolved selfvaluation issues. The third stage is the intuitive stage. Trading intuitively is the most advanced stage of development. It is the trading equivalent of earning a black belt in the martial arts.”
“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 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. The idea is eventually to learn to become an objective observer of your own thoughts, words, and deeds. Your first line of defense against committing a trading error is to catch yourself thinking about it. Of course, the last line of defense is to catch yourself in the act. If you don’t commit yourself to becoming an observer to these processes, your realizations will always come after the experience, usually when you are in a state of deep regret and frustration.”
“However, the rest of us, who did grow up experiencing a plethora of negative reactions to our actions, would naturally acquire beliefs about mistakes: “Mistakes must be avoided at all costs“, “There must be something wrong with me if I make a mistake“, “I must be a screw-up“, or “I must be a bad person if I make a mistake“, Remember that every thought, word, and deed reinforces some belief we have about ourselves.
If, by repeated negative self-criticism, we acquire a belief that we’re “screw-ups,” that belief will find a way to express itself in our thoughts, causing us to become distracted and to screw up; on our words, causing us to say things about ourselves or about others (if we notice the same characteristics in them) that reflect our belief; and on our actions, causing us to behave in ways that are overtly self-sabotaging. If you’re going to become a consistent winner, mistakes can’t exist in the kind of negatively charged context in which they are held by most people.”
“Now, the sole purpose of trading mechanically is to transform yourself into a consistently successful trader. If there’s anything in your mental environment that’s in conflict with the principles of creating the belief that “I am a consistently successful trader,” then you will need to employ the technique of self-discipline to integrate these principles as a dominant, functioning part of your identity.
Once the principles become “who you are,” you will no longer need self-discipline. Because the process of “being consistent” will become effortless. Remember that consistency is not the same as the ability to put on a winning trade. Or even a string of winning trades for that matter, because putting on a winning trade requires absolutely no skill. All you have to do is guess correctly, which is no different than guessing the outcome of a coin toss, whereas consistency is a state of mind that, once achieved, won’t allow you to “be” any other way. You won’t have to try to be consistent because it will be a natural function of your identity. In fact, if you have to try, it’s an indication that you haven’t completely integrated the principles of consistent success as dominant, unconflicted beliefs.”
“I am a consistent winner because: 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.”
“The first principle of consistency is the belief, “I objectively identify my edges.” The key word here is objectively. Being objective means there’s no potential to define, interpret, and therefore perceive any market information from either a painful or euphoric perspective.”
The way to be objective is to operate out of beliefs that keep your expectations neutral and take the unknown forces into consideration. Remember, you have to specifically train your mind to be objective and to stay focused in the “now moment opportunity flow. Our minds are not naturally wired to think this way, so to be an objective observer you have to learn to think from the market’s perspective. From the market’s perspective, there are always unknown forces (traders) waiting to act on price movement. Therefore, from the market’s perspective, “every moment is truly unique,” even though the moment may look, sound. Or feel exactly the same as some moment logged away in your memory bank.
“Instead, you become susceptible to committing all the typical trading errors (hesitating, jumping the gun, not predefining your risk, defining your risk but refusing to take the loss and letting the trade turn into a bigger loser. Getting out of a winning trade too soon, not taking any profits out of a winning trade, letting a winning trade turn into a loser, moving a stop closer to your entry point, getting stopped out and watching the market trade back in your favor, or trading too large a position in relationship to your equity).
The five fundamental truths about the market will keep your expectations neutral, focus your mind in the “now moment opportunity flow”. And, therefore, eliminate your potential to commit these errors. When you stop making trading errors, you’ll begin trusting yourself. As your sense of self-trust increases, so will your sense of selfconfidence. The greater your confidence, the easier it will be to execute your trades (act on your edges without reservation or hesitation).”
“I pay myself as the market makes money available to me.”