Mark Douglas’ excellent book, Trading in the Zone, should be in every trader’s library. It should be read at least once a year. Well maybe not once a year because that would mean I would have read it 22 times now.
BUT… I take umbrage with Douglas and disagree with some of his analysis. To find out why keep reading.
Thinking Like A Trader
Trading distilled down to its simplest form is a pattern recognition numbers game.
Trading distilled down to its simplest form is a pattern recognition numbers game. We use analysis to identify patterns, define risk and determine profit targets and the trade works or it doesn’t. In either case, we go on to the next trade. This is simple to comprehend yet extremely difficult to do. In fact, trading is probably the hardest thing you’ll ever attempt.
You’ll think trading is easy because once you have the foundation established (brokerage account, etc.) all you have to do is click a button and you are magically trading. Unfortunately, once you click that button the difficult part starts to rip you apart. Now you must enter the realm of the 5 fundamentals truths in trading. You must pass into a state of not having to know, and then completely believe that in order to operate in a state of not knowing you have to identify how to truthfully manage your expectations. To manage your expectations you must align your mental environment so that you believe without a shadow of doubt in the five fundamental truths.
3 Stages of Development to Becoming a Consistently Successful
order to be a consistently profitable trader, you will go through three stages”
- The Mechanical Stage
- The Subjective Stage
- The Intuitive Stage
Douglas says, “Once you have completed the mechanical first stage, you can then advance to the subjective stage of trading. In this stage, you use anything you have ever learned about the nature of market movement to do whatever it is you want to do. There’s a lot of freedom in this stage, so you will have to learn how to monitor your susceptibility to make the kind of trading errors that are the result of any unresolved self-evaluation issues. The third stage is the intuitive stage. Trading intuitively is the most advanced stage of development. It is the trading equivalent of earning a black belt in the martial arts.”
This is Where Douglas and I Part Ways
I disagree that we need to enter the Intuitive Stage to be a successful trader because I don’t believe you can teach intuition. I thought I would begin to understand the intuition stage the longer I traded but just the opposite has occurred. I have become even more firm in my belief that you cannot teach intuition and the third stage is reserved for the few who have that innate ability. To tell you the truth, I’m not sure I’ve ever met anyone who has that ability. I know I don’t have trading intuition.
I don’t believe you can teach intuition
That’s the bad news. The good news is that it doesn’t matter. I’m in the subjective stage knowing full well I will never be an intuitive trader yet find this stage gives me everything I need to be a consistently profitable trader.
We’re the Plan in “Plan your Trade and Trade your Plan” – TraderJanie
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