Trading consists of 5 fundamental truths
- Anything can happen.
- You don’t need to know what is going to happen next in order to make money.
- There is a random distribution between wins and losses for any given set of variables that define an edge.
- An edge is nothing more than an indication of a higher probability of one thing happening over another.
- 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.
How Beliefs Shape Our Lives
- They manage our perception and interpretation of environmental information in a way that is consistent with what we believe.
- 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.
- Anything we decide to do or any outward expression of behaviour will be consistent with what we believe.
- 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:
- Beliefs seem to take on a life of their own and, therefore, resist any force that would alter their present form.
- All active beliefs demand expression.
- 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