The Traders Edge: Thinking in Probabilities

It takes a tranquil and untroubled carefree state of mind to navigate the market successfully.
Trade in the moment – manage expectations – eliminate emotional risk.

Trading consists of 5 fundamental truths

  1. Anything can happen.
  2. You don’t need to know what is going to happen next in order to make money.
  3. There is a random distribution between wins and losses for any given set of variables that define an edge.
  4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
  5. Every moment in the market is unique.

Probabilities Paradox: Random Outcome, Consistent Results – like a casino

Creating a belief that “I am a consistent winner” is the primary objective.

The Seven Principles of Consistency.

How Beliefs Shape Our Lives

  1. They manage our perception and interpretation of environmental information in a way that is consistent with what we believe.
  2. They create our expectations. Keep in mind that an expectation is a belief projected into some future moment. Since we can’t expect something we don’t know about, we could also say that an expectation is what we know projected some future moment.
  3. Anything we decide to do or any outward expression of behaviour will be consistent with what we believe.
  4. Finally, our beliefs shape how we feel about the results of our actions.

There isn’t much about the way we function that beliefs don’t play a major role in.

The Primary Characteristics of a Belief

There are three basic characteristics you need to understand in order to effectively install the five fundamental truths about trading at a functional level in your mental environment:

  1. Beliefs seem to take on a life of their own and, therefore, resist any force that would alter their present form.
  2. All active beliefs demand expression.
  3. Beliefs keep on working regardless of whether or not we are consciously aware of their existence in our mental environment.

Create a strong, unshakeable belief in your consistency as a trader.

Mark Douglas

All our beliefs should be in absolute harmony with our desires, and all our beliefs are structured in such a way that they are completely consistent with what works from the environment’s perspective.

Trading intuitively is the most advanced stage of development. It is the trading equivalent of earning a black belt in the martial arts. The difference is that you can’t try to be intuitive, because intuition is spontaneous. It doesn’t come from what we know at a rational level. The rational part of our mind seems to be inherently mistrustful of information received from a source that it doesn’t understand. Sensing that something is about to happen is a form of knowing that is very different from anything we know rationally.

Trading in the Zone – Mark Douglas

Risk | Forex | Psychology - Trading is primarily a behavioral exercise; understand your behavior and your more likely to be a successful trader.

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