Question about Mark Douglas, Trading in the Zone, and Risk

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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Kai
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Thanks for posting this, was looking for something from Mark Douglas. Not much of a bibliophile so this is perfect.
stueytrader
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I have read several authors on trading psychology (partly because I have a natural interest in psychology, also because I trade - of course).

Mark Douglas is interesting in his background, as apparently he admitted himself he failed as a trader (at least earlier in his career, not sure of later). I take that as a big motivation issue, that even someone as renowned as him showed how easy it is to fail at trading earlier in a career. Then also, to grow and develop and come to understand oneself much more over time and experience in trading.
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Euler
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I've always been a bit sceptical on people who give advice having failed at something. It's easy to fail at anything, but it's much harder to fail then turn things around. That's who I want to learn from.
stueytrader
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Euler wrote:
Thu Jan 16, 2020 11:41 am
I've always been a bit sceptical on people who give advice having failed at something. It's easy to fail at anything, but it's much harder to fail then turn things around. That's who I want to learn from.
Yes, a valid point and probably right to be sceptical. However, I'm not sure whether he continued to fail in later times (don't have all the knowledge on that). One would presume he improved his own trading, given he's such as guru!
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Kai
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I guess it depends on what constitutes a fail in the first place, the very definition of it is "to be unsuccessful in achieving one's goal". So if you keep trying you have not technically failed yet as it's a normal part of any successful process, for me you've only well and truly failed if you give up on it.
trader44
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listen to mark douglas most days before i trade its certainly helped me improve as a trader :D
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Morbius
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Euler wrote:
Wed Mar 29, 2017 8:54 pm
I've never read or listened to it, so I suspect it's not a critical part of your journey. Though people seem to like and recommend it so I guess people have found it useful.
+1

I have read more books on psychology down the years than most I guess so I feel that this comes within my knowledge spectrum. I have read two of Mark's books and was sorry to hear that he passed on a few years ago. He does some good stuff on Youtube as well and most people will take something out of his books.....However...caveat time and this is where I agree with Peter.

Many people in my experience over exaggerate the need for psychology as if its the Holy Grail...it is and it isn't but many put the cart before the horse on this one. If all you have is "psychology" in your trading then you basically have NOTHING!!!

A strong psychology is simply a derivative of something far more powerful. That is the knowledge that not only are your systems and methods sound both in their theoretical structure but also proven by results over time. It is the absolute undiluted knowledge that your methods are correct and backed up by consistent profits that creates a strong psychology and nothing else, you can't magic it out of thin air. Psychology is very important but its a derivative of something larger. Without a strong proven method then whatever "psychology" you have will be pulled to pieces by losses and volatility.

Nothing creates a strong psychology more than knowledge and good results and the former comes before the latter....Correct Knowledge = Consistent Results = Good Psychology
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darchas
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Morbius wrote:
Sat Oct 17, 2020 4:44 pm
Euler wrote:
Wed Mar 29, 2017 8:54 pm
I've never read or listened to it, so I suspect it's not a critical part of your journey. Though people seem to like and recommend it so I guess people have found it useful.
+1

I have read more books on psychology down the years than most I guess so I feel that this comes within my knowledge spectrum. I have read two of Mark's books and was sorry to hear that he passed on a few years ago. He does some good stuff on Youtube as well and most people will take something out of his books.....However...caveat time and this is where I agree with Peter.

Many people in my experience over exaggerate the need for psychology as if its the Holy Grail...it is and it isn't but many put the cart before the horse on this one. If all you have is "psychology" in your trading then you basically have NOTHING!!!

A strong psychology is simply a derivative of something far more powerful. That is the knowledge that not only are your systems and methods sound both in their theoretical structure but also proven by results over time. It is the absolute undiluted knowledge that your methods are correct and backed up by consistent profits that creates a strong psychology and nothing else, you can't magic it out of thin air. Psychology is very important but its a derivative of something larger. Without a strong proven method then whatever "psychology" you have will be pulled to pieces by losses and volatility.

Nothing creates a strong psychology more than knowledge and good results and the former comes before the latter....Correct Knowledge = Consistent Results = Good Psychology
I very much agree with a lot of this. And in fact I think you can go a bit further in that the focus on psychology can sometimes end up having an adverse affect. It's something I've been thinking about in general with the rise in self-help books recently, and I think what they can sometimes do is almost make failure seem like a moral failing and that can be damaging. Motivational stuff which implies you can think or will yourself to success can potentially make you feel like a failure, as if there's something wrong with you internally, if you don't actually succeed. Success is difficult to define, and there's often a confirmation bias from those that achieve it that perhaps underplays the element of luck they had in their success, or the myriad little advantages that they had in lives as a platform for that success.

Coming back to trading specifically, if you don't have a viable strategy then no amount of psychology will help. And in fact it can leave you feeling worse as you feel as if there's something wrong with your psychology which is preventing you from winning, when really you might just need to tweak one or two things or spend more time in the markets.

Just some thoughts there which I've been mulling over in relation to this area in general. My caveat being I haven't actually read this particular book and so all the above might be way off the beaten track! I've just finished Alain De Botton's 'Status Anxiety' which has prompted a lot of my thoughts in this area and I would recommend to anyone interested.
eightbo
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Douglas himself stressed in a more recent seminar that he made many assumptions when creating Trading in the Zone / his other early works and basically got way deeper into things and was working on something more complete from the ground up so it applied to all (most?) cases.

I believe that was the Simpler Options Las Vegas Mentorship from 2015 and then of course he died later that year, no clue if his notes were complete enough to have it published or not, be a shame if it's not released but yes certainly many other ways to find trading success and I think a book can only ever be a part of the equation as the trader in question is themselves a variable with unknowns to the author.

It's fascinating to me how you can have two traders trading same strategy and market type but their journeys to get there can be vastly different.
So many variables at play I think a trader needs to be really open-minded, honest with themselves, and actively adjusting based on their results as necessary to make meaningful progress.

"Psychology" problems (emotional decision making) should be seen as something to avoid not overcome.
No amount of extra time reading psychology books or trading the markets will do any good for the trader once they've identified their individual triggers - they must change to eliminate them, or if they're tolerable meaning they still leave you with a +ve expectancy than it's down to the trader's discretion as to if they want to switch it up.

if you're here to make money you need a +ve expectancy that's a given but imo pushing that expectancy higher by improving your edge is often not a viable solution for many because any mistake or spot of bad variance could start a negative spiral. I think how good your edge is just minimises the frequency of "psychological" problems it doesn't necessarily eliminate them, and your personality determines the degree of danger/risk that presents to the trader on an individual basis e.g. one might never allow themselves into a negative spiral for whatever reason based on previous life experiences and they can get away with trading in the presence of various issues and it shows up as small-moderate drawdown but another trader might subconciously believe they genuinely deserve to lose money for making a mistake and of course they always then manifest that without realising. Same trades/initial mistake plays out differently for these 2 traders with one always blowing up and the other always ending their session after the first hit. The guy blowing up can consciously tell themselves they "just need to stop after x happens" but it's pointless because stuffs happening more powerfully beneath the surface and of course nothing will change next time round. For that trader as the risk is so high they have to either change what they're doing or set up their environment in such a way so they can't physically make the mistake.

I'm a big advocate now for "EQ not IQ" as your actions are determined by how you feel so if you're able to manage your feelings as they arise in real-time it's invaluable for a trader — it's a practical skill that's far more useful to a trader than any amount of knowledge learned from books or even established professional traders. Trading is a performance activity after all.
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