Book Club - The Disciplined Trader

[Susan 111]

Chapter 11

W- To learn a skill, we usually break the skill down into a series of small steps and concentrate on each individual step until we can put all the steps together into a series of effective movements. 
 

A - Mark explains how we learn a skill to us… he further discusses that once we learn each skill; we can automatically access it so our attention is freed to learn more 

A - I think this is good to remind ourselves. One step at a time. We know this to be true. We don’t expect our kids to be able to be experts instantly at new skills, but we all come into trading expecting to reach an expert level overnight. Lol. It’s kinda funny in retrospect 

[Miguel Angel 65]

Chapter 6 - The Market Is an Unstructured Environment (catch up)

W - “Understanding yourself is synonymous with understanding the markets because as a trader you are part of the collective force that moves prices. How can you begin to understand the dynamics of group behavior well enough to extract money from the group, as a result of their behavior, if you don’t understand the inner forces that affect your own? When you do understand the inner forces that affect your behavior and take responsibility for what you do and don’t do, and what you can and can’t do, you will begin to perceive how and why other traders comprising the group behave the way they do." (p. 56)

A - Mark begins with the fundamental truth of trading within an unstructured environment: we can only understand how the collection of individuals who participate in the market move prices if we understand the motivation behind our own behaviors and take responsibility for our own action.

A - To understand myself and my motivation for why I do the things I do is the most important task that I work on every day. The better I can understand, control, and accept my behaviors during the trading day, the better I can interact with the market to take advantage of the opportunities that are presented to me.

[Miguel Angel 65]

Chapter 7 - In the Market Environment, Reasons Are Irrelevant (catch up)

W - “In fact, however, the market’s behavior is mostly irrational, if you define rational as any action that is the result of a specific methodology or is planned in advance and definitely not random because irrational behavior is very predictable. If you want to learn to predict price movement, you don’t need to pay attention to reasons. What you need to do is determine how the majority of traders perceive the external conditions in relationship to either their fear of scarcity, or their fear of missing out, or both.” (p. 64)

A - There is nothing predictable about the market except for how predictably irrational it is. There are millions of traders in the world interacting with each other and expressing their behaviors onto the market through the price action on the charts which is the only way we can perceive the market’s direction as a whole.

A - Reading charts has become very important in my trading strategy. It is more important to me than indicators, moving averages, studies, order book, etc. It is the way I perceive the collective behavior of the market.

[Miguel Angel 65]

Chapter 8 - The Three Stages to Becoming a Successful Trader (catch up)

W - “Your degree of self-valuation will regulate how much money you will give yourself (the market doesn’t give you the money, you give it to yourself based on your ability to perceive opportunity and execute a trade) out of the maximum potential available or perceivable at any given moment or time frame perspective. Regardless of the depth of understanding you have of market behavior or what you consciously intend, you will only “give” yourself the amount of money that corresponds to your level of self-valuation.” (p. 72)

A - The market does not take money or give money. It is our ability to perceive the opportunities in the market and to execute based on our level of experience and time in the market that will allow us to take profits.

A - I used to thank the market for giving me whatever profits I was able to take from a trade. That was an erroneous thinking on my part because if the results of my trades, good or bad, are my full responsibility, then profit taking is the result solely based on my ability to perceive opportunity and execute trades. It’s all up to me and no one else.

[Susan 111]

Chapter 12 - The Dynamics of Goal Achievement

W - Any difference between what we wanted, expected, desired or needed and what we got is simply an indication of the degree to which we haven't learned what we needed to know or evidence that we don't have the appropriate skills to do what needed to be done.

A - Mark is telling us our results are just a picture of where we are and what we still need to learn and/or how to execute

A - This has been rolling around in my head for a few weeks now - this sentence.  Our equity curve, results, performance, journal and all we have are just a mirror/picture of where we are in our development.  We don't have to take that the wrong way; rather embrace it.  These are all the things we can and need to learn to become who we want to be.... if we can document it, create a method to learn/correct it - we can grow into what we want.... we have to see it so that means being very self aware & then devise a plan to change it.  It is not easy, but it is doable.  If we focus on the process and read the results only as opportunities to learn & grow; we begin a process of continuous improvement.  One day we will look back and say - gosh I forgot how far I came...

[Miguel Angel 65]

Chapter 9 - Understanding the Nature of the Mental Environment (catch up)

W - “Essentially, what I am stating is that our existence straddles two very different dimensions simultaneously. We live in and perceive three-dimensional space, and, as a result, our physical senses are subject to the limitations of time, where one moment passes after another in straight linear fashion, whereas we think in a dimension where time and space as it is perceived in the physical environment doesn’t exist.” (p. 98)

A - Mark is making an important distinction about our existence and how we experience the physical and the mental environment at the same time but in different ways. Only the mental environment can store our experiences of the external environment as memories in energy form that is not limited by time or space but can act as a force on our behavior.

A - Understanding the nature of the mental environment has great implications on my trading because it reinforces the idea that most of my struggle trading is in the mental and not physical environment and that all of my memories are acting as a force on my behavior. It also gives me great hope that I have power to minimize the impact of those memories that are stored as negative energy on my trading only if I consciously make an effort to do so.

[Miguel Angel 65]

Chapter 10 - How Memories, Associations, and Beliefs Manage Environmental Information (catch up)

W - “I am sure everyone has had the experience of reading unfamiliar material a second, third, or fourth time and perceiving something new with each subsequent reading. What is happening here? With each reading you are building a mental framework that enables you to recognize what was available but unperceivable to you when it was read previously. That is, all the new insight that you garner with each reading was available from the book the moment you picked it up the first time. However, you weren’t able to perceive what it had to offer in the way of insights or understanding until you created an energy loop that enabled you to perceive it; otherwise, the words get read but the insight goes by completely unnoticed even though you are looking right at it.” (pp. 106-107)

A - This is a wonderful metaphor to help us understand that many distinctions appear in the market but can only be perceived by the trader based on the state of the trader's mental framework to take advantage of all the opportunities the market has to offer right in front of the trader’s eyes.

A - I liken the daily practice of trading the charts to reading a book a second, third, fourth time. With every trade I am able to perceive something new about the market that I didn’t understand before which enhances and builds my mental framework for trading.

[Dan F 73]

Chapter 12

W- No on is impervious to thinking that they can keep what is actually important in their mind. Some times what we remember isn’t what actually makes the trade work, so we are then left to refigure out what we think that we’re missing.

A- What I could gather from Marks writing was our memory fades with time but the ideas that made the energy for the thought will stay indefinitely in the medium they are recorded to.

A- I do not have anything complex to apply this thought to besides trying to work on re-writing how some of my trades work and keep up with my growth.

 

[Norma 33]

Chapter 12 – The Dynamics of Goal Achievement

W: “even if we have learned the appropriate skills, there may be any number of beliefs or fears that act as barriers or limiting forces that will prevent us from properly executing the steps leading to what we want to accomplish”.

A: Mark is saying our beliefs is what prevent us from achieving our goals regardless of how many strategies or technical analysis we learn or how good we are at them.

A: We all traders, at the beginning of our journeys, believe that learning all the technical analysis and strategies will make us the best traders. Little we know, to accomplish that, we need to work on ourselves first, on our mental state, on our emotions, perceptions, biases, so on; from the inside out.

[Dan F 73]

Edited March 8, 2023 by Dan F

[Miguel Angel 65]

Chapter 11 - Why We Need to Learn How to Adapt (catch up)

W - “Changing our mental environment to correspond with the constant external changes going on in the physical environment is not automatic. The information stored in our mental environment about the nature of the physical environment can remain unchanged for years or a lifetime, for that matter, regardless of how outdated, useless, or even harmful it may be. And furthermore this outdated knowledge will continue to act as a force on our behavior, causing us to interact with the environment in completely inappropriate ways relative to the conditions. So even if we are experiencing satisfaction in certain areas of our lives, we cannot take it for granted that the conditions that we have learned to interact with will stay as we know them to exist. The outside conditions are in constant motion, presenting us with different forces to learn about and adapt to.” (p.137)

A - Mark explains that the information that is stored as energy in our mental environment may be outdated and not useful in dealing with the physical environment that is constantly changing and can actually hurt us as we deal with that physical environment. We have to learn and store new information so that we can interact with the physical environment in ways that create satisfaction in our lives.

A - When I started day trading, I had erroneous information about the nature of the market and used that information to trade which caused me to have a huge negative equity curve. It was only when I diminished the energy from the information that was useless for trading in an unstructured market (college degrees, job experience, etc.) that I was able to open my mind to the possibilities of what the market could teach me about itself. It was only then when I was able to experience satisfaction as a day trader.

[Miguel Angel 65]

March trade review:

Worst trade - Tradervue | AAPL Trade Detail

Best trade - Tradervue | CRWD Trade Detail

[Susan 111]

Chapter 13 - Managing Mental Energy

W - Everyone instinctively knows that if we allow ourselves to think about something, the thoughts have the power to change the way things exist inside of us.  And once things change on the inside, we know we will perceive and experience a different outside.

A - All change begins with thought. (Mark states this in another area of the chapter & I think this sentence explains this further)

A - Thoughts are so important and we have to be careful what we think and what we allow into our environment.  Be careful with what we read, watch on TV, etc - it is all influencing who we are whether we believe it or want it to... As we think about things we start to see things differently (beliefs can even change); this will inevitably cause the way we experience the world & the way the world/people experience us!

[Dan F 73]

Chapter 13

W- When you start out there are plenty of things that you don’t know. If understanding is a problem, then your direction in trading will not do great either.

A- Mark said that knowledge is the shining light when you are stuck in the depths of fear. It’s something to give you a shining light on your way out.

A- It’s good to keep in mind that there isn’t a finite amount of information to learn, so you can’t be considered an expert forever. When you explore you understand what is happening here and now. This is one of many things I hope to keep what I know relevant in trading.

[Miguel Angel 65]

Chapter 12 - The Dynamics of Goal Achievement (catch up)

W - “To adapt, we need to choose not to resist learning and change. This requires a willingness on our part to think outside of the limitations established by our beliefs, associations, and memories and a willingness to learn how to manage our mental energy so we can release ourselves from the negative effects of our painful memories.” (p. 148)

A - Mark is telling us that we must go beyond our internal mental limits of beliefs, associations, and memories by accepting that everything is in a constant state of change and to keep up with these changes we must be in a continuous mode of learning in ways that are productive to achieving our goals and creating satisfaction in our lives.

A - Change and learning how to deal with change is something that I think about and meditate on every day. It has helped me with my personal development as a human being and to adapt during times of crisis. The idea of impermanence, the state or fact of lasting for only a limited period of time (dictionary), helps me to understand that I cannot allow outdated beliefs, useless associations, or painful memories to interfere with my goals and achieving happiness in this lifetime.