The Disciplined Trader is a book written by the late Mark Douglas. In this post I quote from The Disciplined Trader to reinforce the idea that trying to make predictions or control the market doesn’t matter. Sounds interesting? Let’s start.
The Book:
The Discipline Trader is the first book written by Mark Douglas, the second – and more popular – one is Trading in the Zone.
The book argues that if one wants to become a consistently profitable trader, managing / controlling one’s emotions are more important than superior trading strategies and market analysis. It also highlights how traders sabotage their trading because of emotions like fear and greed. Lastly, it provides a framework through various exercises that a trader can use to overcome his / her shortfalls in order to become more consistently profitable.
Mark Douglas goes to great lengths, in the book, to expand, explain and explore the aforementioned topics to ensure the readers understand and comprehend why a new way of thinking about trading and the markets are needed to become successful.
The Quote:
What you believed about value and your reasons for believing it may be of the highest quality, but if the market doesn’t share your belief, it doesn’t really matter how “right” you are based on your superior reasoning process or what you believe to be the quality of your information, because prices are going to go in the direction of the greatest force.
The point here is that right and wrong as you may traditionally think of them don’t exist in the market environment. Academic credentials, degrees, reputations, even a high I.Q. don’t make you right in this environment as they would in society.
A Short Explanation:
The above quote boils down to:
- No matter what you believe the market is going to do or should do, the market will move in the direction of the greatest force (buyers overcoming sellers and vice versa).
- No matter how great your analysis is, or how perfect a setup is, it can still fail because the market moves as the market moves. There’s so many forces at play at any one time in the market, no amount of analysis can predict the market with 100% certainty.
- “Normal” thinking doesn’t work when it comes to the markets. Traditionally being wrong is frowned upon, in the markets being wrong is just a part of the game. Normally we try to avoid losing, but in the markets losing is normal.
- Your background doesn’t count, the market doesn’t discriminate. Those with credentials and those without, stand an equal chance. Working hard in the “traditional” sense doesn’t guarantee success; a new way of thinking is needed. Working hard can and will help, but only if you cultivate the mindset of a trader.
People tend to think of the market as a person (I’m certainly guilty of it). So they:
- blame the market for their losses.
- scream at the market.
- hate the market.
- are angry at the market.
In short, they treat the market as if it is a person that have wronged them and reacts / responds accordingly. But the market doesn’t care. It doesn’t care if you lose, win, blow your account, made an honest mistake, stalked a trade for a week and missed the entry, or whatever. It will move up, down and sideways to beat of its own drum; it doesn’t have feelings. If you can make peace with this, chances of succeeding increase greatly.
Finally:
There are some things in trading which you can control; the market isn’t one of them. Focus and work on the things that you can control. Don’t fight the market.
Thanks so much for reading. I hope the markets are treating you well. Best of luck.
Thanks and Regards,
Trading SOS SOS
