Hello traders todays topic is about probably the most important part of trading yet no one talks to much about it.
To be honest I recently had a losing streak however nothing important , I manage my risk very well. I decided to research the problem from the origin in order to have a minor setback with major comeback. I’m going to share something very important.
I fundamentally believe that no one is born a great trader. Becoming a trader goes against the human psychology. You have to unlearn to learn.
As Mark Douglas say “No man ever reached to excellence in any one art or profession without having passed through the slow and painful process of study and preparation”.
Rest in Peace.
There is a learning curve to master, I’m not the kind of trader that force the charts , I truly believe in finding knowledge that is going to help me reading non related trading books . I know that working on myself will allow me to reach a strong mental peak performance.
More than anything – is about overcoming our own character. And if we can’t overcome all of them, we need to find ways to manage them.
We get a lot of questions asking what trading books do the AIRFOREXONE head traders recommend. After all there are tons of books out there about trading.
There are only a few standout ones and someone who has a lot to share is Mark douglas and all of his books.
Even if his books are interesting, the learning path is absolutely personal. Specially in trading
Books or courses( outside information) will contribute only with 20% of the results. The rest comes from your inner research.
As they say : Doctors won’t make you healthier , mentors won’t get you richer. Teachers won’t make you smart , Books will not make you smart. Ultimately you have to be only inspired and take responsibility to build personal proper methods to apply the knowledge adapted to your personality.
Natural learning is and always will be from the inside out, not vice versa. You are the learner and it is your individual, internal learning process that ultimately governs your learning.” That is what is going to bring you the results you want. NO one else is behind the buy and sell click.
The below is some of the most important WISDOMS from Mark douglas.
I am currently working on myself so I found interesting to share this with you.
Apparently the most common fears in people are: Dying, public speaking, losing money and being wrong. Therefore it comes as no surprise that some of those human fears creep into our trading too.
Mark Douglas identified a total of four trading fears:
- Fear of losing Money
- Fear of leaving Money on the Table
- Fear of Missing Out
- Fear of Being Wrong
You may even be able to isolate which of those fears is the strongest within yourself. You might have build your proper personal experiences.
Those four fears can drive our behavior in the market, and that to our detriment. For example: the fear of missing out will lead you to chase a trade which will mean you enter at a less favorable price, you risk even more , your risk reward become less interesting and As a result you take on more risk and in the long run erode your profits.
You will be profoundly more successful once you manage those four fears
. Or at least once you accept it and you learn to properly react.
For us there is a winning attitude in trading that Everyone needs to develop.
- You must have positive expectations of the efforts with an acceptance that whatever results you get are a perfect reflection of your level of development and what you need to learn to do better.
- You are responsible for what you have learned, as well as for everything you haven’t learned yet.
- A winning attitude opens you up to what you need to learn. Taking responsibility is the cornerstone of a winning attitude.
- You must accept the risk. Accepting the risk means accepting the consequences of my trades without emotional discomfort or fear.
- When you make yourself available to take advantage of an opportunity, you don’t impose any limitations or expectations on the market’s behavior. Of course the ultimate goal is to get paid.
- You must create a state of mind that is not affected by the market’s behavior. You must adopt the habit of getting paid no matter the outcome. We are not here to work for free.
- Any degree of struggle, trying or fear associated with trading will take you out of the opportunity flow, and therefore, diminish my results.
- You shouldn’t perceive anything the market can do as threatening. If nothing is threatening, you have nothing to fear. If you are not afraid, you don’t need courage. If you are not stressed, you don’t need nerves of steel. If when the market moves you feel a threat then you are risking to much and you are not accepting the risk at all.
A good trader always knows the risk inherent to every trade and it does not cause them to lose their discipline, focus and confidence of the outcome.
If you have been following us for a long time you understand that we are not gamblers. We encourage our community of members to become risk managers.
To be honest , F**CK social media , everyone only shows profits , fake withdrawal screens , blue mt4 , fake materialistic peanut brain lifestyle. No one talks about how to learn to overcome setbacks. We truly believe that the trading industry could be different if they adopted another perspective.
well let’s go back to what really matters.
One of the most important trading skills you can acquire is learning to accept risk! every trade is unique and everything can happen. for that you need to properly react to a loss
HOW TO PROPERLY REACT TO A LOSS?
Having a trading loss is the most natural thing. The sooner you get your head around it, the better.
Trading is like any other business. you have your income and your expenses.
The organisation works perfectly the moment you control your expenses and your income becomes superior to your expenses in the long run.
We consider trading losses as business expenses. You need to simply accept them without it affecting your attitude or confidence to put on another trade once your edge appears in the market again.
If you cannot accept risk, it means you never really considered the possibility of the market not to go in your favor which of course will get you out of the game.
Since we do not control the market, but simply work on a statistical edge, any trade setup may at any time turn into a loser. The more energy you put into a particular trade, the more an eventual loss will hurt. You have to understand that every single trade has very little meaning, the big picture is what carries all the meaning.
The best trades are those who are instinctively executed. less effort only proper intuition.
We do not care about the outcome of one single trade , we care about the outcome of a series of trades.
YOUR SHOULD TAKE FULL RESPONSIBILITY
All trading outcomes are self-generated. This is a game of confidence.
You must take full responsibility for the outcome of every single trade.
It’s not the markets fault, not the news, not your mentors broker’s, your computer’s or anyone else’s for that matter.
The sooner you start accepting this the better a trader you will become.
Use outside perspective to only confirm your believes and become more confident with yourself. We created the VIP group to share our trade ideas and a lot of value but as mentors we cannot control parameters that you only have the control. ( risk management )
What we do in our VIP group is that we share trade ideas and all that stuff but we encourage our members to see it as a mentorship to compare their charts with our charts and eventually trade like us and build a proper confidence
HOW A PROFESSIONAL TRADER REACTS?
- Predefines their risk parameters prior to entry in order to accept the outcome.
- Is able to cut their losses at any time
- Has a plan to take profits (pays himself no matter the outcome).
- Is able to overcome losing streaks
- Is able to think in terms of probabilities.
HOW TO UNDERSTAND THE PARADOX OF PROBABILITIES?
RANDOM OUTCOMES WITH CONSISTENT RESULTS
Let’s talk about something that none of those gurus will teach you:
There are two layers of belief that you must combine:
- Micro level – Must believe in the uncertainty and unpredictability of the outcomes of each individual trade.
- Macro level – Must believe that the outcome over a series of trades (i.e. large sample size) is relatively certain and predictable.
Or to put it another way: If you roll a dice, the outcome of every throw is completely unpredictable. However if you rolled a dice say a million times, the outcome is becoming more and more predictable. Why? Because the dice is not manufactured flawlessly. It’s edges aren’t 100% symmetrical, it’s center of gravity will be not exactly in the middle, etc. All this means, that if the sample size is large enough, the dice will show a certain number more often than another. It’s the same with your trading edge.
the better your edge, the more certain will the outcome at a macro level be. Or the less of a sample size you will need to show said outcome.
RIGID RULES, FLEXIBLE EXPECTATIONS
The market is a constant flow of opportunities. It is extremely tempting to just jump in at any point and hope for the best. It’s called gambling. Do not be a gambler. If you follow your trading plan to a tee (so you are rigid in your rules) you define boundaries that will protect you in this endless opportunity flow.
At the same time we need to have flexible expectations. Why? It goes back to the point above, every moment in the market is unique , everything can happen. So the outcome of every trade will be different. Therefore our expectation needs to be flexible.
MARK DOUGLAS WISDOMS
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
In summary , I have minor setbacks for major comebacks and I am a consistent winner in the market because I:
- objectively identify my edge.
- predefine the risk of every trade.
- I completely accept the risk (I am willing to let go of the trade).
- act on my edge without reservation or hesitation.
- pay myself as the market makes money available to me (take profits)
- continually monitor my susceptibility for making errors.
- understand the absolute necessity of these principles of consistency, and therefore, I never violate them