Book Club - Trading in the Zone June 2022

[Susan 111]

12 hours ago, Dan F said:

It really hit me the second time around listening to this book that a trader can almost start "in the zone". Its up to the traders inevitable slump to get out of equilibrium.

@Dan F yes that hit me too!  I’m reading a small book about Zen principles. It talks about “the end becoming the beginning” too. I love confluence. Lol

[Dan F 73]

Chapter 3

W  How we envision the market and stocks move is unique for every trader. Coming into trading it’s idea to realize that what you want the market to do and what actually does is something that your mind needs to separated

A The goal is to have realistic expectations of the outcome of any trade

A  Finding the way to fix your expectations can be a trail with many paths. Note where you’re the most deficient in what you trade and what actually happens.  For me my expectations that a stock will not move more than a 1 minute candle before bouncing.  What I’m trying to do about it now is 1. Not start looking at the one minute right away instead look at the 5 minute 2. Try to stick to my stop even though I might not make as much or go red 3. Revaluate in about a month.

[Susan 111]

@Dan F great topic. Let us know how this goes for you. Talk soon!

[Dan F 73]

On 7/24/2022 at 8:48 PM, Norma said:

Chapter 3

W: “On the other hand, if what you perceive in market information is painful in some way, then you will naturally try to avoid that pain by either consciously or subconsciously blocking that information, you’ll systematically cut yourself off from any number of opportunities to enrich yourself. In other words, you cut yourself off from the opportunity flow”.

A: Our fear of pain prevents us from seeing the opportunities the market presents us. Fear makes us (1)hesitate the execution of the trades (2)entering the trades too late or not at all; (3)exiting the trades too early.

A: It’s one the issues we all traders goes through, especially as a new trader. Fear is something we need to be constantly aware of and embrace it.

Agree and i think fear and hesitancy  doesn't go away for those trades that succeed, It just morphs into more manageable chunks.

[SaskMike 8]

Chapter 3

 

W: "Taking responsibility means acknowledging and accepting, at the deepest part of your identity, that you—not the market—are completely responsible for your success or failure as a trader. : "Taking responsibility means acknowledging and accepting, at the deepest part of your identity, that you—not the market—are completely responsible for your success or failure as a trader."

A:  Mark is helping us understand that, as traders, we have complete control over our trading and that successes and failures in our trading outcomes is fully dependent on our actions. He argues there are plenty of opportunites for traders to profit from their trades over the long run. Learning and imlementing a tradebook is our responsibilty. The market does not have it out for us....

A: For me, I think I've not completely embraced the idea that I am 100% responsibe for my trading outcomes. 

Edited July 28, 2022 by SaskMike

[Miguel Angel 65]

Chapter 3 Entry:

W - "If you perceive the endless stream of opportunities to enter and exit trades without self-criticism and regret, then you will be in the best frame of mind to act in your own best interest and learn from your experiences." -Mark Douglas

A - Mark is giving us hope that if we do the hard mental work of accepting responsibility for every aspect of our trading journey without shifting blame to the market or other external factors; we will indeed achieve a trading mindset that will allow us to learn from our experiences and take advantage of the infinite ♾️ opportunities the market offers us every single day.

A - I am a member of a trading support group on Discord and no matter what kind of trading day I'm having my trading buddies always remind me that there are endless opportunities in the market and that resetting to neutral win or lose is the best frame of mind to be in. This reminder helps me to not to allow self-criticism and regret to overwhelm my psychological environment when I'm trading and I am so grateful to have the support of my trading buddies, along with the support of my fellow BBT members. 🙏

Edited July 28, 2022 by Miguel Angel
Changing experience to experiences.

[kendal 10]

Chapter 3

W: “Developing a winning attitude is the key to your success. The problem for many traders is that either they think they already have one, when they don’t, or they expect the market to develop the attitude for them by giving them winning trades. You are responsible for developing your own winning attitude. The market is not going to do it for you, and I want to be as emphatic as I can, no amount of market analysis will compensate for developing a winning attitude if you lack one. Understanding the markets will give you the edge you need to create some winning trades, but your edge won’t make you a consistent winner if you don’t have a winning attitude.” 

W: “Everyone else to one degree or another assumes they are taking responsibility; but the reality is that they want the market to do it for them. The typical trader wants the market to fulfill his expectations, his hopes, and dreams.” 

W: “The market, on the other hand, has no responsibility to give us anything or do anything that would benefit us.” 

Analyze: Mark is summarizing that traders tend to feel the market is going to do something for us. The market isn’t going to fulfill our hopes, dreams, and desires. We are solely responsible for our own failure or success as a trader. 

Apply: I feel lucky to be able to read this book while still trading in sim. It’s providing me with a wealth of information to think about and an even bigger list of things to be aware of and guard against. Going into live trading with this book as a major guide for framing my daily thoughts, will certainly help me on the path to being consistently profitable. 

[Susan 111]

@kendal I agree this is great to read in SIM.  I read the 1st time as a very new trader.  Reading it again now I can see it from different eyes & perspectives.  I think it is one of those books we will always get something from no matter what level we are at... Trading psychology bible in my humble opinion:)

[Susan 111]

@Miguel Angel sounds like you found a nice group of trading friends...we have to find those relationships & offer each other support (in my opinion).  I love the quote you picked and I think relates back to establishing a positive, winning attitude...it is so important in trading (and life)!  The outcomes will come, but I believe the mindset must come first & I strongly believe if the mindset comes first; you will enjoy the learning process & trading journey much more!

[Kath 10]

On 7/23/2022 at 1:42 PM, WearyBear said:

@Susan  Thank you.

The good news is that I recently tightened my daily max loss A LOT, so Friday's loss is not a problem in any way from a pure $$$ point of view. -Tightening max loss, BTW, was something I did based on a conversation on that topic on an earlier book club call 🙂

I do feel like I am pretty good at retrospection, at asking "How did I get HERE, when I wanted to be THERE?", so that's what I have been working on since that day. I went back and reviewed this month's trades and found some repetitive mistakes I was making. I then simulated all this month's trades using the things I learned during my review, and the results are now significantly better. Out of 15 simulated trades, 12 were green, 2 red and one became a "No trade" since my entry criteria were never met.

I have created a simple and easy to read check list which I will review *every* day before market open. I think of it as a "takeoff check list". I credit this list with a lot of the improvement I have seen in my trading since the max loss day.

 

 

On 7/23/2022 at 1:42 PM, WearyBear said:

@Susan  Thank you.

The good news is that I recently tightened my daily max loss A LOT, so Friday's loss is not a problem in any way from a pure $$$ point of view. -Tightening max loss, BTW, was something I did based on a conversation on that topic on an earlier book club call 🙂

I do feel like I am pretty good at retrospection, at asking "How did I get HERE, when I wanted to be THERE?", so that's what I have been working on since that day. I went back and reviewed this month's trades and found some repetitive mistakes I was making. I then simulated all this month's trades using the things I learned during my review, and the results are now significantly better. Out of 15 simulated trades, 12 were green, 2 red and one became a "No trade" since my entry criteria were never met.

I have created a simple and easy to read check list which I will review *every* day before market open. I think of it as a "takeoff check list". I credit this list with a lot of the improvement I have seen in my trading since the max loss day.

 

Thank you for sharing your experience with your “trade journal”...gives me inspiration!

[Susan 111]

Chapter 4 

what a fantastic read! These are from first part of the chapter  

W- Consistency is a state of mind that has at its core certain fundamental thinking strategies that are unique to trading. 
 

You can’t rely on the market to make you consistently successful anymore than you can rely on the outside world to make you happy. 
 

If you trade trying to get what you want from the market; your mental defense mechanisms kick in to compensate for the difference between what you want & what you’re not getting so you don’t experience emotional pain.

Its all taking place inside your head. If there’s a struggle, it is you who are struggling. 
 

A - you have to have the proper mindset to be a consistent trader similar to having a positive/happy mindset to be a happy person. 
 

A - this really resonates with me as it is discussed in every juandra of mindset/psych… if you want money - you have to develop a money mindset. If you want a family/love; you need the mindset to be in the place to recognize, give and receive love. Become a consistent trader, a CEO, a happy person, a healthy/fit person, really anything - you have to develop the proper mindset for it. It all starts in the mind - you have to see it and the mind has to prepare to have it before it can actualize in your life. You have to believe you have it, believe you’re deserving & worthy of it for it to take root. Again - these things can be read across the board for developing mindset for whatever you want in life. A happy person doesn’t achieve happiness from a mindset of despair… a truly, soulfully, joyful person will be happy no matter their circumstances. Their happiness isn’t dependent on places/things/people - true happiness & joy is a deeper thing. If you make being consistently profitable, being healthy, being XYZ a deeper thing and only think thoughts aligned with this & those thoughts become your beliefs - this will become your reality - it has to… it’s your story so write in your mind as you want it to be. 
 

The last 2 sentences remind me of being in a zen state. Stop going in each day to trading from a place of want & with expectations … we all want money - ok, but we can’t show up that way/in that state of mind. Show up calm and open to whatever opportunities the market has for you today. If it isn’t much; then it isn’t much. If it’s a ton of opportunities - cool. Be steady & in control of your emotions & thoughts. Imagine dating someone (man or woman whatever fits for you); imagine the man comes around always wanting XYZ or the woman seems constantly money hungry - super turn offs… they seem desperate for what they want and aren’t even thinking right or able to have a good conversation because they’re so focused on getting what they want from you. Now imagine a person that you go out with that has zero agenda - they come with a good attitude and ready to move in or out based on how things go… be the 2nd person when you come to trading; not the greedy, desperate gold digger. Lol. 
This is a mind game and whatever is or isn’t happening that day is happening to you and in your head. You’re entering and creating any tension you feel. You’re responsible for the drama. Leave the drama for good TV☺️
 

Enjoy your weekend. I found the 2nd half of this chapter equally captivating and time permitting will type more sentences to share that I loved☺️☺️

[Dan F 73]

Chapter 4

W- There are many things that can scare you out of the market. Some you can see immediately and some that is in your subconscious that you don’t see till after the trade is done, like sleep deprivation, when your mind is somewhere else besides trading. These types of issues can land you in iffy trades.

A- Paraphrasing: it is not good to get into a trade if you will end up fearing the consequences

A- The first way that I’m going to try to apply this by recognizing that I’m sleepy or thinking about my other job. These have been, from what I can tell, my crux of why I get into trading something that makes me hold my breath. Also I need to stop feeling like my livelihood depends on a green trade.

 

Edited August 2, 2022 by Dan F

[Susan 111]

@Dan F love all of that…. Trying to take the pressure of “my livelihood” off my trading too. See you in the morning!!

[Miguel Angel 65]

Chapter 4 entry:

W - Accepting the risk means accepting the consequences of your trades without emotional discomfort or fear. This means that you must learn how to think about trading and your relationship with the markets in such a way that the possibility of being wrong, losing, missing out, or leaving money on the table doesn't cause your mental defense mechanisms to kick in and take you out of the opportunity flow. -Mark Douglas

A - Mark is defining for us what it truly means to accept risk in trading and that it is more than just accepting how much money we are willing to lose in a trade. Accepting the risk is a psychological state of total acceptance of our trading outcomes, good or bad, win or lose, taken or not taken, that puts us in what I call an "emotionally neutral state" so that we are prepared for the opportunities being presented to us without letting an "emotionally charged state" take us out the "opportunity flow".

A - This is the hard work that I am focused on in my trading as of late. I have been less concerned about trading strategies, journaling, daily outcomes, total Rs, etc, etc, etc. It is not that I do not work to improve those areas, but my focus of attention has been on developing this trader's mindset of accepting consequences of all of my actions and trading without emotional discomfort or fear.

I put in the hard of work of completing the PCT Bootcamp and developing a TradeBook that I found difficult to implement when I went from sim to live trading. I soon realized that there were psychological hurdles I needed to deal with and spending too much time on refining strategies and over analyzing statistics was not going to get me where I needed to go in my trading journey.  In another part of the chapter Mark states, "When the internal struggles ends, everything becomes easy. At that point, you can take full advantage of all of your skills, analytical or otherwise, to eventually realize your potential as a trader". I truly believe this and I will work to end my internal struggles so that I can become a consistently profitable trader. 🙏

[Susan 111]

@Miguel Angel - I love how he says - "we think we are accepting the risk"....I can resonate with that, and you bring up a great point...not just financial risk, but if we are not in the 100% proper mindset losing will cause psychological pain....are we thinking/accepting that??!!  Look forward to discussing today!