Stage 8 - Knowledge Bank
Trading In The Zone – Mark Douglas
We talk about Trading in the zone A LOT through The Social Traders core strategy. A lot of traders have read this book and there is a good reason for it, it is one of if not THE best trading book on the market.
If you haven’t already got this book and are serious about your trading goals, do yourself a favor and purchase it.
The book starts off with an ‘attitude survey’ so before you have even started the book Mark Douglas is laying the foundation to really question whether you are as good as you think you are as a trader.
Question number 1: To make money as a trader you have to know what the market is going to do next?
Agree or disagree?
Question number 8: The more a trader learns about the market and how they behave, the easier it will be for them to execute his trades?
Agree or disagree?
Now really think about those two questions, in most industries the more knowledge you have about a particular subject the better you will become at it right, the more equipped you will be? Well that is not the case with trading acquiring and acquiring more and more knowledge from different creases of the market may cause other issues.
Trading is a game of probabilities, it’s about an edge and mastering that edge. So many traders delude themselves thinking that acquiring more knowledge will help them succeed when really the tools to succeed are right in front of them, with their mentally typically being the only thing stopping them from being consistently profitable.
Let me show you a snippet from Chapter 7:
“Traders who have learned to think in probabilities approach the markets from virtually the same perspective. At the micro level, they believe that each trade or edge is unique. What they understand about the nature of trading is that at any given moment, the market may look exactly the same on a chart as it did at some previous moment; and geometric measurements and mathematical calculations used to determine each edge can be exactly the same from the one edge to the next; but the actual consistency of the market itself from one moment to the next is never the same”
So what I want you to think about before trading at scale,
If you’re really serious about leveling up your psychology
If you’re really serious about leveling up your trading capital
Then get this book, it will be a game changer for you trading.
The Chimp Paradox – Prof Steve Peters
The Science of mind management in business and in life. Although this book is not directly linked to trading, some of the key topics discussed are key to levelling up your overall mindset as a trader, especially if you are looking to trade larger capital.
So let’s think about this,
Every time you get a negative thought or belief creeping into your mindset about trading, I want you to use this to interrupt the pattern of the thought.
‘Is this thought that I am having right now useful to me?’
Ask yourself that question, like really ask yourself that question…
‘Is this thought useful to me’
Trading isn’t easy, right… Let’s say that you’re having a streak of losses and things just aren’t going your way. It could be that you’re on a funded account and 3 of your first trades have been going against you.
Maybe you deviated from you trading plan and you know it but you did it anyway because you fell down a negative path of thoughts
It doesn’t matter what it is, you MUST stop yourself and ask yourself this question…
“Is this thought that I’m having right now useful to me?”
And the analytical side of your brain if taught and trained correctly will kick in and say
‘No it’s not snap out of it’
The Chimp Paradox will teach you to train the analytical side of your brain.
There is a lot in this book to digest but The Chimp Paradox uses a simple analogy to help you take control of your emotions and act in your own best interest, whether it’s in making decisions, communicating with others, or your health and happiness.
Mark as Completed
Extreme Ownership – Jocko Willink, Leif Babin
Extreme Ownership is another book that is not tied to trading but the overall process and discussion points can be directly linked to the psychological skills required to be a successful trader.
This book teaches you everything you need to know about discipline.
Discipline equals freedom, discipline is the most important thing because if you have the discipline to do what you know you need to do it will excel your trading career.
Most traders don’t do it, they expect to wake up everyday feeling happy and motivated and when they aren’t they get upset and don’t know what to do.
You see it so much most particularly in this generation,
The thing is successful people don’t wake up inspired and motivated every single day, in fact quite the opposite. The difference is that successful people know how to control their emotions when they don’t.
Discipline is having the ability to show up like you love it even when you don’t feel like doing it, it really is that simple.
I know so many people that do not have the discipline to even get out of bed and attack the day. If you think about it, your bed is the most welcoming and warming place you know, it is where you feel most comfortable. So many people will have a day off and just use that time to stay in bed..
so if you can just learn to get out of bed when you don’t feel like doing it BUT do it as you enjoy it this will translate into so many areas of your trading.
Think about it, if you do not have the discipline to do something as simple as getting out of bed, what are the chances that you have the discipline to take consistent profits from the online trading markets?
If there is one word that will allow you to scale to the capital within your goals for it will be discipline.
The 7 Habits Of Highly Effective People
I remember a story of one of my grandparents about how everything cost 2 pennies when she was young, but now everything has got constantly more expensive and when I have the privilege to see her, the complaining would last for hours and hours.
And that’s exactly what reactive people do.
They always focus on the things that they cannot control.
It’s not possible that a concept like inflation could exist and if it did, it is not possible that they wouldn’t know about it.
On the other hand, proactive people realise, even if my complaints were completely objective, it doesn’t help me.
So I am going to focus on what I can control.
If a proactive person owns a business where he sells a product, instead of focussing on ‘how people these days don’t appreciate good product anymore and how the government has horrible regulations’
He focuses on
How can Improve my product so that my customers cannot live without it?’
Do you realise how much responsibility, how much dedication, how much commitment the proactive person would need to have to take this route?
That is why so many people focus on the things they cannot control, rather than focussing on the things they can.
Habit number 1 is to be proactive.
If you can implement these 7 habits into your trading, you will be able to achieve much greater results.
Looking at the example of reactive vs proactive, reactive traders are going to blame the market when a trade goes against them and have their head down the minute it does, meaning whatever else they do that day they will be in a bad mood or potentially have shorter patience and discipline.
Proactive traders will understand the market has gone against them but will already have their next setup forecasted, planned and revised before the move is going to happen. They know that they can do and will do whatever they like and so we are simply playing the probabilities we have in front of us.
The Forex Mindset – Jared Martinez
Trading in the Zone and The Forex Mindset both look at the psychology side of trading rather than the technical side.
You see once you understand your edge to the fullest there is no further progression from a technical perspective. What I mean by this is that there is no indicator that will automatically make your trading better, in fact quite the contrary more technicals will likely confuse you more and make you see the markets in conflicting ways.
Jared Martinez traded the forex market for a decade through the 1980s and ’90s before he discovered that successful trading requires 10 percent skill and 90 percent emotional intelligence
Chapter 1 – Get Excited About Trading
Chapter 2 – Finding a Mentor in Trading and in Life
Chapter 3 – Greed and Fear Control the Market
Chapter 4 – Achieving Excellence at Trading
Chapter 5 – Understanding How Your Head and Heart Work
Chapter 6 – The Importance of Emotional Intelligence
Chapter 7 – The Importance of Change
Chapter 8 – Creating a Personal and Traders Constitution
Chapter 9 – Dealing with Frustration as You Trade
Chapter 10 – Dealing with anger as you Trade
Chapter 11 – Alter Your Attitude Alter Your Trading Results
Chapter 12 – Learning Patience and Self Control to Avoid Temptation
Chapter 13 – Listening with Humility
Chapter 14 – Learn to Trade with Confidence
Chapter 15 – Protect Yourself at All Times
Follow Your Dreams and Persist Until You Succeed