20080119

Mark Douglas:

 

“It's when you're winning that you are most susceptible to making a mistake, overtrading, putting on too large a position, violating your rules, or generally operating as if no prudent boundaries on your behaviour are necessary. You may even go to the extreme of thinking you are the market. However, the market rarely agrees, and when it disagrees, you'll get hurt.”

20080118

 

20080117

Mark Douglas:

 

“There's something else about the nature of trading that makes it easy to escape the responsibility that comes with creating structure in favour of trading randomly: It is the fact that any trade has the potential to be a winner, even a big winner. That big winning trade can come your way whether you are a great analyst or a lousy one; whether you do or don't take responsibility. It takes effort to create the kind of disciplined approach that is necessary to become a consistent winner.”

 

20080116

 

20070115

Mark Douglas:

 

“Randomness is unstructured freedom without responsibility. When we trade without well-defined plans and with an unlimited set of variables, it's very easy to take credit for the trades that turn out to our liking (because there was "some" method present).”

20080114

 

20080111

Mark Douglas:

 

“Trading can be characterized as a pure, unencumbered personal choice with an immediate outcome. Remember, nothing happens until we decide to start; it lasts as long as we want; and it doesn't end until we decide to stop. All of these beginnings, middles, and endings are the result of our interpretation of the information available and how we choose to act on our interpretation.”

20080110

 

20080109

 

20080109

 

Mark Douglas:

 

“The need for rules may make perfect sense, but it can be difficult to generate the motivation to create these rules when we've been trying to break free of them most of our lives. It usually takes a great deal of pain and suffering to break down the source of our resistance to establishing and abiding by a trading regime that is organized, consistent, and reflects prudent money-management guidelines.”

 

 

Mark Douglas:

“The unlimited characteristics of the trading
environment require that we act with some degree of restraint and
self-control, at least if we want to create some measure of consistent
success. The structure we need to guide our behavior has to originate
in your mind, as a conscious act of free will.”

Mark Douglas:

“One of the many contradictions of trading is that it offers a gift
and a curse at the same time. The gift is that, perhaps for the first
time in our lives, we're in complete control of everything we do. The
curse is that there are no external rules or boundaries to guide or
structure our behaviour.”

Mark Douglas:

"Regardless of what you may have planned
or wanted to do, any number of psychological factors can come into
play, causing you to become distracted, change your mind, become
scared or overconfident: in other words, causing you to behave in
ways that are erratic and unintended.
Because gambling games have a formal ending, they force the
participant to be an active loser. If you're on a losing streak, you can't
keep on losing without making a conscious decision to do so. The end
of each game causes the beginning of a new game, and you have to
actively subject more of your assets to further risk by reaching into
your wallet or pushing some chips to the center of the table.
Trading has no formal ending. The market will not take you out
of a trade. Unless you have the appropriate mental structure to end a
trade in a manner that is always in your best interest, you can become
a passive loser. This means that, once you're in a losing trade, you
don't have to do anything to keep on losing. You don't even have to
watch. You can just ignore the situation, and the market will take
everything you own—and more."

Very, very ace :

"But let’s suppose you are different. You possess the patience
of a saint, you have the discipline to follow this rule inviolably.
Imagine the following scenario: You place a trade in
EUR/USD. Let’s say you decide to short the pair at 1.2500 with
a 1.2600 stop and a target of 1.2300. The trade is going well.
The price moves your way. EUR/USD first drops to 1.2400,
then to 1.2350, and slowly makes its way toward 1.2300.

At 1.2335 the price action pauses and the pair starts to
inch back up, first trading through 1.2350, then 1.2375. You,
however, are patient. You have nerves of steel. You hold on,
looking for your 2:1 reward-to-risk. The price starts to move
back down and you are starting to feel vindicated. Back to
1.2350, 1.2325; slowly but surely you see the target in sight.
1.2320, 1.2310, 1.2305. Your take-profit order sits on the platform
waiting to be filled. The price ticks a few more pips
down, reaching all the way to 1.2301 — but then it bounces
back, first slightly, then violently, until in a matter of seconds
it’s at 1.2350, then 1.2370.

You remain calm. The price nearly touched your target. It’s
bound to test that level again. You won’t make the same mistake
others make of cutting your profits short. You will stay
in the trade and follow the classic money-management rules.
Of course, the price never does see 1.2300. Instead the
pair “verticalizes” and soon reaches 1.2600, easily taking
out your stop. You are now faced with the idea that you had
a 199-point profit and allowed it to become a 100-point loss.
Welcome to real trading..."