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The Definitive Guide to Mastering the Psychology of Trading by Mark Douglas
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The Definitive Guide to Mastering the Psychology of Trading by Mark Douglas

  #31 (permalink)
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grausch View Post
I am afraid I don't have any advice for that. Perhaps someone who has worked with Depth of Market could comment. I should note that Mark used the order-flow examples to illustrate his point that the outcome of individual trades is random.

Based on this post - https://futures.io/psychology-money-management/37041-mark-douglas-has-died-2.html#post521200 - and my reading of the book, I get the feeling that Mark believed intuition plays a big role in trading. I come from more of a mechanical trading background, so I would run backtests to determine whether an edge is valid. Just because I would approach this differently than Mark does not mean the book is wrong, it is merely a matter of my perspective vs Mark's.

I get the feeling you are very interested in the book. If that is the case, I would definitely recommend you read it. I found it to be a very good read and definitely got value from it.

ok thanks grausch - my question was actually a bit provocative - that's the reason I tend to use the 25 trades rule, i.e. a reasonable (not too small but not too large) sample to indicate whether something is working or not.

I agree though that if I were entirely trading mechanically I would definitely looking to backtest something over a period as large as possible.

Thanks also for your recommendation. I am a huge fan of Mark Douglas, simply because of the concepts he wrote in Trading in the Zone which I personally regard as a 90% psychology/10% trading book, or at least that's the value I place on the book's contents, so I'll definitely give this one a go as well at some point.

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  #32 (permalink)
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Marc Abell View Post
It seems that Marc Douglas's book is one of the most consistent and inspiring book about trading I have ever read. Some time agoI was looked up the book on Amazon. It seems that the book were published in four sections, of which only the first section was available on Kindle, but for some reason is not available anymore. So, go to the actual stores in you places men, book definitely worth it.

thanks Marc - however it is still available on Amazon - Here's the link

Mark Douglas - Amazon

By scrolling down you can see the other sections as well.

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  #33 (permalink)
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grausch View Post
I just finished reading the book. I thought the start of the book was great - Mark really guides you through how order-flow influences how prices move. In essence, he reinforced the concept that I first read in the Richard Dennis interview in Market Wizards, namely that the outcome of each individual trade is random, but after several trades the outcome is not random, i.e. a skilled trader will make money over the long run, but could lose money on individual trades. Mark explains this concept extremely well while explaining common psychological mistakes traders make.

Where I found the book a little weaker was in the steps a trader can do to address the weaknesses previously discussed. I found that Edward Allen Toppel's Zen in the Markets provides similar advice on dealing with those weaknesses, but it is much easier to read.

There are some items I don't agree with, i.e. taking 25 trades to determine whether an edge is valid. If I really wish to determine whether an edge is valid, I could backtest it over 10 years or more of data, analyze how it performs in certain market conditions and also investigate what happened when good or bad trades cluster together in the backtest. This would provide a much more in detail understanding of the perceived edge vs just looking at the result of 25 trades.

However, don't let the few negative items I mention discourage you to read the book. It does provide a lot of very relevant thoughts and ideas that would benefit most traders that are open to those ideas.

The book is in need of some editing - I have never seen a shot machine in my life and the last chapter has references to mediating rather than meditating. Several items of that nature occur in the book. Perhaps future updates will fix these issues, but I can't risk updating the book in my kindle as I run the risk of losing the last 3 "instalments" of this book since it was split into 4 after I bought it.

I would just like to say that back testing does not and can not equal live trading and is a separate skill apart from trading either mechanical or discretionary. But it does have value. And that even a mechanical trading system still involves some degree of discretion. For example you choose to turn it on and you turn it off at your discretion and or make other adjustments depending on your perceptions.

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
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  #34 (permalink)
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Blash View Post
A part from chapter 2 I think is worth sharing.....

Mark a 1/4 way into chapter 2 is talking about learning to win in trading. And how people think that is what is important to learn how to do. Makes sense right? Turns out not really. Learning some technical method some pattern creating some algorithm or learning the ins-and-outs of order flow, market geometry etc etc ad nauseam ad infinitum cannot create the skill sets need to obtain the goals we all truly are after. Yes having winning trades is something we need to learn about and how to do but it's very, extremely, different from becoming a consistently profitable trader with an income one can count and rely on for years, decades. Mark states that there is "no positive correlation" connecting learning a way to have winning trades and being a consistently profitable trader over a long period of time none.

Ron

Did Mark make a lot of money from his trading?

Keep your mind in the future, in the now.
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  #35 (permalink)
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aquarian1 View Post
Did Mark make a lot of money from his trading?

Probably not, the ole saying about those who teach and those who do.

Though I guess it depends on what a "lot of money" is?

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TheTradeSlinger View Post
Probably not, the ole saying about those who teach and those who do.

Though I guess it depends on what a "lot of money" is?

And does it rally matter ? What matters, are his teachings right or wrong ?
Phil Jackson won 11 NBA champions as head coach. Could he have been
5th player on court next to Jordan, Pippen, Rodman ? No.

"Trading in the zone" is the best book about trading in my eyes.

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  #37 (permalink)
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aquarian1 View Post
Did Mark make a lot of money from his trading?

Mark was a self-admitted failed trader. He said so in the preface to Trading in the Zone. He made his money writing and consulting. Does it matter? I guess it depends what you get out of his books. If you find value in his writings then it doesn't matter. A lot of people cite Trading in the Zone as one of the best books ever written about the psychology of trading so I think his work stands on it's own regardless of his own trading success.

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The Definitive Guide to Mastering the Psychology of Trading by Mark Douglas


TheShrike View Post
Mark was a self-admitted failed trader. He said so in the preface to Trading in the Zone. He made his money writing and consulting. Does it matter? I guess it depends what you get out of his books. If you find value in his writings then it doesn't matter. A lot of people cite Trading in the Zone as one of the best books ever written about the psychology of trading so I think his work stands on it's own regardless of his own trading success.



I think perhaps a closer examination of the book Trading in the Zone and Mark's other books, for sure The Disciplined Trader, is in order. For example page 13 of The Disciplined Trader top of the page, quoting Mark's work on this page.....



"By June 1982 I was starting to make consistent money for my customers who relied on me for their trades. Not a lot of money by most trader standards but steady. I was having winning days that were turning into winning weeks and months. Then sometime in August 1982 I thought of writing a book or at the very least developing a seminar to explain to other traders what I had discovered for myself."



The first edition of The Disciplined Trader was in 1990.



I feel maybe you did not read enough of Trading in the Zone and none of The Disciplined Trader. Many many traders have failed attempts at trading. Mark was one of them. Thank you Mark. Because of it he discovered an entire field in the trading world, traders psychology and wanted to share it. As well as became consistently profitable.



I lost $50k in this business. Glad I did. A drop in the bucket in the scheme of things.



I was lucky enough to have met Mr Douglas. All I can say is I believe him. I can't prove to you with his account statements. But I can tell you he poured his heart out. Writing he said was extremely hard for him. He did not use references and other peoples work to compile a book. Just turn to the back of his books and look for a bibliography, which he pointed out it lacking. He asked sincere questions of himself (sincere is the operative word here in a huge way) and gradually got his answers. Took a long time to complete his books due to this process.



The entire reason he stopped coaching traders officially as part of his business is because it took him away from his own trading. So yes he traded and yes he was profitable. It's kind of like saying Sir Isaac Newton did not know math but just invented Calculus and Newtonian Physics.



Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)

Last edited by Blash; February 15th, 2016 at 02:57 PM. Reason: grammer
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  #39 (permalink)
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Blash View Post
I tell you what I'm realizing to a greater extent from this book is caring much less about trading is one of the keys for me. Seems I have a point of reference now as well. Before the holidays I did some sim trading to test out pairs trading in stocks. Can't say I loved it. Bid ask spread in stocks is complete crapola. Never a market order that's for sure. Sometimes it's just ridiculously huge........lol. Because of this distaste for it I was extremely mechanical about it. But I don't have to like it for it to work and it did at least on sim. So adding it in in two weeks here once I get caught up on my levels and Excel stats.

Ron


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Marc Abell View Post
Well, the one and only thing that I can tell you guys is that I'm realizing to a greater extent from this book is caring much less about trading is one of the keys for me. I mean - it simply seems that I have a point of reference now as well, but sometimes it's just ridiculous - because of this distaste for it I was extremely mechanical about it, I mean - do not have to like it for it to work and it did at least.

Hi Marc. Is there any specific reason why you copy other people's posts? Not the first time I've seen it as part of a pattern....

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  #40 (permalink)
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Blash View Post
I tell you what I'm realizing to a greater extent from this book is caring much less about trading is one of the keys for me. Seems I have a point of reference now as well. Before the holidays I did some sim trading to test out pairs trading in stocks. Can't say I loved it. Bid ask spread in stocks is complete crapola. Never a market order that's for sure. Sometimes it's just ridiculously huge........lol. Because of this distaste for it I was extremely mechanical about it. But I don't have to like it for it to work and it did at least on sim. So adding it in in two weeks here once I get caught up on my levels and Excel stats.

Ron


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Marc Abell View Post
Well, the one and only thing that I can tell you guys is that I'm realizing to a greater extent from this book is caring much less about trading is one of the keys for me. I mean - it simply seems that I have a point of reference now as well, but sometimes it's just ridiculous - because of this distaste for it I was extremely mechanical about it, I mean - do not have to like it for it to work and it did at least.


xplorer View Post
Hi Marc. Is there any specific reason why you copy other people's posts? Not the first time I've seen it as part of a pattern....


WOW......lol.... not sure what to feel flattered or upset.....lol.....


....but alas life is to short.... But please stop it @Marc Abell. It only hurts you.

I removed my Thanks from his post. When I read it I was like ...YEAH! Right On, WOW I love how this guy thinks......lol

(And by "hurt" I do not mean it in the traditional way some are going to take it ...more of like a dis-ease of the psyche. I can explain further if I need to.)

Ron

It is an axiomatic fact that while you meditate you are speaking with your own spirit. In that state of mind you put certain questions to your spirit and the spirit answers: the light breaks forth and the reality is revealed.
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
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