A Mark Douglas interview on trading psychology, beliefs and the practices of successful traders.
Mark Douglas is a trader and author of The Disciplined Trader and Trading in the Zone. His books are definitely worth the read, and this video discusses some of the topics from those books. If you have a trading method but can’t seem to stick to it, or you are struggling to find profitability. Or, your psychology seems to be getting in the way of your trading success (getting in your own head too much, or not making the correct decisions), then this video may give you insights and tips for overcoming that.
This video has been shared because of the information on trading psychology it contains. This is not an endorsement for Wizetrade, the company conducting the interview.
A few of the interesting day trading topics that are covered:
–The profit gap: the difference between what a trader ends up with, and what he/she could have had if they just followed their system.
–Winning requires no skill. But consistency does take skill. Since it is easy to win occasionally, with no skill, most traders get trapped into thinking they already have skills, and thus never become consistent.
–Trading requires a vast amount of mental skill, not just a decent trading method. A fantastic trading method won’t produce profits unless the correct mental skills are also in place.
–The outcome of any single trade is random. Only over many trades is a statistical “edge” seen (or not seen).
–Understanding and accepting randomness is a key to consistency.
–Trading isn’t just about us making a trade. We require other traders to make our trades winners (we require them to get in and get out of our positions–and those people are doing the opposite transaction as us). Thus, we need to understand what is within our sphere of control, and what isn’t.
–Emotions can affect perception. For example, how we interpret information will actually change when we are in a losing trade, compared to when we are in a winning trade. Just sit and watch the market, there is no emotional attachment. Now, get into a trade. Likely there is some emotion there. But the market didn’t do that. That is us transferring our emotion on to the market. So we are now thinking differently, and in a different state than we were when we were just watching the market. Are we still objective?
–If other traders don’t agree with YOUR perception of the market, you lose, regardless of how good you think your perception/reason for your trade is.
Mark’s book, Trading in the Zone, was recently mentioned in the Best Trading and Investing Books article. For additional reading on this topic, see 5 Beliefs You Must Accept to Improve Day Trading Performance.
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