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Trading in the Zone - Mark Douglas
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Trading in the Zone - Mark Douglas

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Trading in the Zone - Mark Douglas

Having finished Trading in the Zone by Mark Douglas for the second time and annotating, highlighting, and commenting in the headers and footers enough to warrant my own edition. And in the spirit of futures.io (formerly BMT) forum sharing that I have benefited greatly from, I thought I would share my experience and impressions for those considering the book. I was surprised to see on futures.io (formerly BMT) no specific thread, having seen a high level of participation and favorable reviews and comments on Amazon.

For those who are considering it, some thoughts:

If I had three books that I could, in hindsight, read to begin my trading education about learning how to trade, I would include this one. His trading wisdom matches Big Mikes "by line" wisdom and several other reputable authors; it needs to be read in its entirety.

Overall, the book builds to a solid conclusion and is cohesive in its organization and content. He is a clear writer and draws enough examples and insight to almost belabor some points (see: boy bitten by dog, afraid of dogs example).

I cannot say any of the following bullet points without a caveat; since I don't know him personally nor have I worked with him at anytime or capacity I preface this with it appears:

1. He is not a charlatan or a get-rich quick artist.
2. He is a trader, and a very experienced one that is active.
3. He knows what the most successful traders do and how they do it; I read Jack Schwager's Market Wizards and New Market Wizards (both excellent) semi-concurrently with TradingITZ and it was impeccable how much the wisdom gleamed from the interviews in MWs (&NMWs )matched in a distilled and straightforward form the rules and beliefs in TradingITZ.
4. He knows traders, he knows markets.
5. He WILL help you in your trading:
a. Your attitude - building confidence and discipline
b. Your approach - your expectations and beliefs in yourself as a trader
c. Your beliefs and perceptions of the market - the randomness and uncertainty
d. Your "typical trader" pitfalls and problems - rationalization and expectations
6. It is not new age baloney, it has efficacy and real world application and correlation.

I have a number of quotes of his that have changed me as a trader, including:

Chapter 5 The Dynamics of Perceptions P70
"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 react without resistance or hesitation, but with the appropriate amount of positive restraint to counteract the negative effects of overconfidence or euphoria."

Chapter 9 The Nature of Beliefs p138
"Our minds are not naturally wired to be "objective" or to stay in the "now moment". It means we have to actively train our minds to think from these perspectives."

Chapter 8 Working with Your Beliefs p131
The Fundamental Truths:

1. Anything can happen.
2. You don't need to know what is going to happen next to make money.
3. There is a random distribution between wins and losses for any given set of variables that defines 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.


(to be continued)

VF

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Quick Summary
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Discussion on Mark Douglas - Trading in the Zone

 
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Big game hunter
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I've read this book and "the diciplined trader" multiple times until it began to sink in for me . In practice , the principles set forth by Douglas are not easy to apply but not impossible if you really want to succeed . Over time my beliefs have been altered to de-energize negative thoughts , by affirmation , and I do have the framework described by douglas to achieve my goals . The five fundamental truths are gospel to me and re-affirming them once in a while is good practice for any trader .

Thanks for starting up this thread and hopefully we can all discuss this book further .

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I read this book several years ago and it is a great read. I have read it through a few times and I consider the principles to be a must for traders. I really credit this book in many ways with putting me on the path to getting "my mind right".

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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I have to say... I read this book, and did not like it. I felt that Douglas was quite wordy and repetitive, and I felt like I was waiting, page after page, for him to get to the point. I also felt like he gave a very detailed description of the problems traders face, but never gave a good solution to those problems. "Be confident and disciplined!" Well ok, how do you recommend I go about doing that?

Personally, I had a problem with this book was his Five Fundamental Truths. As soon as I read "Anything can happen", my trading began to suffer! I would see a great setup in the market, and then a voice in my head would say, "But anything could happen!" and I would hesitate to pull the trigger. I know that is not what Douglas was trying to convey, but that is how it affected me. It took me several months to forget those 5 Fundamental Truths and move on from that idea...

I also felt like this was another "gloom and doom" psychology book - yes, trading is risky and dangerous and stressful, but I think that if you focus on negatives, you will draw more negativity towards you (negative p/l!). Be positive, and you will attract good things $$.

My favorite trading psychology book is Amazon.com: Trade With Passion and Purpose: Spiritual, Psychological and Philosophical Keys to Becoming a Top Trader (Wiley Trading) eBook: Mark Whistler: Kindle Store (thank you @Big Mike for recommending it). This book really resonates with me, I love Whistler's approach. He offers numerous suggestions for dealing with the dangers and stresses of trading - in a positive way.

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salisem View Post
I have to say... I read this book, and did not like it. I felt that Douglas was quite wordy and repetitive, and I felt like I was waiting, page after page, for him to get to the point. I also felt like he gave a very detailed description of the problems traders face, but never gave a good solution to those problems. "Be confident and disciplined!" Well ok, how do you recommend I go about doing that?

Personally, I had a problem with this book was his Five Fundamental Truths. As soon as I read "Anything can happen", my trading began to suffer! I would see a great setup in the market, and then a voice in my head would say, "But anything could happen!" and I would hesitate to pull the trigger. I know that is not what Douglas was trying to convey, but that is how it affected me. It took me several months to forget those 5 Fundamental Truths and move on from that idea...

I also felt like this was another "gloom and doom" psychology book - yes, trading is risky and dangerous and stressful, but I think that if you focus on negatives, you will draw more negativity towards you (negative p/l!). Be positive, and you will attract good things $$.

My favorite trading psychology book is Amazon.com: Trade With Passion and Purpose: Spiritual, Psychological and Philosophical Keys to Becoming a Top Trader (Wiley Trading) eBook: Mark Whistler: Kindle Store (thank you @Big Mike for recommending it). This book really resonates with me, I love Whistler's approach. He offers numerous suggestions for dealing with the dangers and stresses of trading - in a positive way.

You do have to focus on negatives in trading and there are many.. You can't just be happy and not recognize the pitfalls. Recognize it, look at it, own it, then change your behavior. Be positive and you will make money does not work in trading. I am not saying we need to trade depressed in fact if in that mentality better to stop. I think I blew out one of my accounts while being as positive as possible but did not change the outcome. Eventually the wide eyed optimist gets slaughtered in the market.

Also understanding "Anything can happen in the market" is paramount for survival. The moment you push button must realize that the market can go any direction and you have no control. Even using high probability setups anything can happen. Trying to believe your stop won't get hit will not change what will happen. The quicker a trader accepts that fact the easier it is to relax. I embrace the potential for a negative outcome on every trade.

I have personally taken most of the emotional side of trading out of my trading by the way I trade. So does not really matter if I am happy or sad my system keeps on chugging. I don't want to trade with negative, positive or any kind of passion. Just cold, clean and unemotional.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; June 11th, 2012 at 05:38 PM.
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liquidcci View Post
You do have to focus on negatives in trading and there are many.. You can't just be happy and not recognize the pitfalls. Recognize it, look at it, own it, then change your behavior. Be positive and you will make money does not work in trading. I am not saying we need to trade depressed in fact if in that mentality better to stop.

Also understanding "Anything can happen in the market" is paramount for survival. The moment you push button must realize that the market can go any direction and you have no control. Even using high probability setups anything can happen. Trying to believe your stop won't get hit will not change what will happen. The quicker a trader accepts that fact the easier it is to relax.

I have personally taken most of the emotional side of trading out of my trading by the way I trade. So does not really matter if I am happy or sad my system keeps on chugging. I don't want to trade with negative, positive or any kind of passion. Just cold ,clean and unemotional.

I'd say it's important to be aware of the negatives, but definitely don't focus on them. A positive mindset is a requirement for success, no matter what you are doing in life!

Sure, logically anything can happen in the market at any time, but that is why we use stops and create a solid risk management plan, and adhere to it. If you don't have a belief that there is a greater than 50% chance of price moving in your favor, why would you enter the trade? You have to have some sort of bias, and solid reasoning for that bias. Maybe thinking "anything can happen" works for some of you, but it sure didn't for me!

If you have truly taken all the emotion out of your trading, congrats to you! It's one thing to trade with emotion, and it's another to recognize your emotions without acting on them. It's perfectly ok to feel anything while trading - happy, sad, excited, scared, whatever - so long as you don't act on it!

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I know most people love the book. But I must admit, I did not care for it. I read it a few years ago, and perhaps I should try reading it again... but I know that three years ago when I was looking for this type of book, Trading in the Zone did not "do it" for me.

I would absolutely highly recommend as a must own series, the Brett Steenbarger books. I would read "The Daily Trading Coach" first, but the other two are fantastic as well.

Amazon.com: The Daily Trading Coach: 101 Lessons for Becoming Your Own Trading Psychologist (Wiley Trading) (9780470398562): Brett N. Steenbarger: Books

Amazon.com: The Psychology of Trading: Tools and Techniques for Minding the Markets (9780471267614): Brett N. Steenbarger: Books

Amazon.com: Enhancing Trader Performance: Proven Strategies From the Cutting Edge of Trading Psychology (Wiley Trading) (9780470038666): Brett N. Steenbarger: Books

For those looking for book reviews, check here:
https://futures.io/traders-hideout/8-some-highly-recommended-books.html

Mike

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Salisem - It may have been sometime since you've read his book:

He promotes having a positive approach and seeking objectivity extensively,

Chapter 3 Taking Responsibility p55

"Remember our definition of a winning attitude: 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 get better."

Many of your negative points about the book, "doom and gloom", not being able to apply his principles, "anything can happen" aren't detrimental to a trader if you understand in its entirety what that means. My initial response to "anything can happen" left me very skeptical too but it is the foundation for the other truths and principles, that once understood as part of the whole - does clear up the confusion you had and indecision that "anything can happen" creates.

Robert C. Miner and Van Tharp address probabilities better than Douglas, but he does explain enough in the text to drive home the point -

Chapter 8 Working with Your Beliefs p132

"4. An edge is nothing more than an indication of a higher probability of one thing happening over another. ... The only evidence you need to gather is whether the variables you use to define an edge are present at any given moment..."

Salisem & BM - Thanks for the book recommendations added them to my "to read" list.

VF


Last edited by VegasFlyer; June 11th, 2012 at 07:24 PM.
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VegasFlyer View Post
Salisem - It may have been sometime since you've read his book:

He promotes having a positive approach and seeking objectivity extensively,

Chapter 3 Taking Responsibility p55

"Remember our definition of a winning attitude: 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 get better."

Many of your negative points about the book, "doom and gloom", not being able to apply his principles, "anything can happen" aren't detrimental to a trader if you understand in its entirety what that means. My initial response to "anything can happen" left me very skeptical too but it is the foundation for the other truths and principles, that once understood as part of the whole - does clear up the confusion you had and indecision that "anything can happen" creates.

Thanks VF - I think for me, Douglas didn't provide descriptive ideas on how to maintain a winning attitude, especially for someone who had been bitten by the markets a few times prior to reading his book. I guess not everyone needs that helping hand (thankfully, or the world would be a pretty dismal place).

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