This chapter discusses the importance of risk management. Traders must define the risks they are willing to take and follow these rules. Proper risk management ensures that losses do not destroy capital and traders can stay in the game. Additionally, only showing profits and not losses as well gives you an illusion that trading is easy. However, it would be best never to forget why you placed it initially—limiting losses and exactly knowing when you’re wrong. I encourage anyone trying to reach the next step in their trading to read this book, its the most practical book you'll ever read. If your identity as a trader is inconsistent, then you can be damn sure your market analysis and results would be inconsistent as well.

The degree by which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader. 7 beliefs to form consistency: I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them. PDF / EPUB File Name: Trading_in_the_Zone__Master_the_Market_wit_-_Mark_Douglas.pdf, Trading_in_the_Zone__Master_the_Market_wit_-_Mark_Douglas.epub So I’ll show you what they are exactly and what you should do when you are in that particular phase… Phase 1: Before the trade The consistently successful trader that you want to become doesn’t exist yet. You must create a new version of yourself, just as a sculptor creates a likeness of a model.Instead, they think of it as a short-term one when they think that all that matters is strategy. Some of them are simply thinking of copying Mark Douglas’ trading strategy, thinking it’ll make them rich too. You start collecting more market analysis or opinions that only support your losing trade, which in turn converts you into an “investor.” As long as you are susceptible to the kinds of errors that are the result of rationalizing, justifying, hesitating, hoping, and jumping the gun, you will not be able to trust yourself. Furthermore, at any given time, most of their trading activity is conducted in response to emotional factors that are completely outside the parameters of the fundamental model.

Could you have prevented losing trades if you had used a 100-period moving average trend filter instead? We have to be careful about what we project out into the future because nothing else has the potential to create more unhappiness and emotional misery than an unfulfilled expectation.” At that point, I’m not sure what happened to the members who followed the admin’s advice because I had already left the group. It means that the only thing you should be improving is your trading routine and not your trading strategy. Many possibilities and creativities open up, and you’ll realize that you’ll have bigger goals than the one you initially had.

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In this case, I suggest using the Average True Range indicator then multiply its value by three (3 ATR) as a buffer.

This book is different from other book about trading that i have read before. Other book may tell you what indicator or stop loss technique that work, but you won’t find any of that from this book.So, once you already have a set of objective rules in place, the next thing you want to do is to… Execute your rules for 20-30 trades regardless of the result and find patterns on how you can improve them. Could you have taken more profits if your trailing stop loss was an 8-period moving average instead of a 20-period moving average? Douglas introduces the idea that trading is a game of probabilities. By understanding the concept of a winning edge, traders can develop strategies that ensure consistent profits over time. Trading is about making decisions that are optimal across a series of trades, not individual ones. I love the way Mark explained why people love trading, and I think to some extent I felt it is true for me. To make matters worse, instead of asking yourself when to cut your losses when the trade starts losing…