disciplined trader. Business psychology of success. Mark Douglas

Introduction.
Due to my special position in financial circles, since 1979, I have had the rare opportunity to communicate with a host of traders, brokers and stock advisors. I myself am not a broker or a writer of market bulletins. I am a senior executive at CompuTrac: we provide stock traders and futures traders with technical analysis software. What is special about my position? For them, I am an outsider: that is, you can be frank with me. When I started trading for myself in 1960, I quickly realized that success in this business, like capital control, was implicitly impeded by my psychology. The same was noticed by everyone who came to me for advice.
That is why I am convinced that the components of trading success are 80% trader's psychology and only 20% - his methodology, whether it be fundamental analysis or technical. So, a person may not be too strong in them, but if he controls himself, he will win. And vice versa: there is a chic trading system, tested, profitable for more than a year; but a person has lost control over himself - and the loss cannot be avoided.

A good trader knows from experience that there can be more losing trades than winning trades. But one must skillfully manage capital, take risks prudently, under the protection of soberly calculated stop orders, and then troubles can be avoided, and with large market moves, profit can be made. Keeping capital under control means controlling both yourself and risk. Both are important, but the second comes from the first: that is, risk control begins already when the trader really understands the psychological factors and takes them into account without starting to assess the risk itself.
I would like to specifically warn both experienced traders and beginners about this: to look at the records with the motivations for their actions, reflecting on them philosophically - this goes without saying. But the real touchstone is practice, active trading under tough conditions. So get down to business without haste. Think about every trade. Why did you want to join it? How did you lead her? Did she succeed? Why? Failed? Why? Write down your findings and reread your notes before any new trade.
At all major CompuTrac seminars I try to get the presenter to talk to the listeners about the psychological aspects of trading as well. After all, who mercilessly reaps the trading benefits of a trader? Who takes the profit? Not some mysterious "he" or the ubiquitous "they", but the trader himself when confused. Remember what Medea said before she killed her own children? She said she knew what she was doing, but she couldn't handle her thoughtless self. If your trading mindset is in tune with that feeling, then this book is definitely for you.

Reading it is a pleasure. My own path to insight lay through thorns. And I recognize myself, walking through them, on the pages of this book: but this is said about me! And here - again about me! Mark's book is a carefully constructed, detailed logical dialogue. You read - and it seems as if you are not reading, but listening to the author, sitting next to him, and he explains in a friendly way what you do not understand.

A good trader knows from experience that there can be more losing trades than winning trades. But you need to skillfully manage your capital, take risks prudently, under the protection of soberly calculated stop orders, and then troubles can be avoided, and with large market moves, you can make a profit. Keeping capital under control means controlling both yourself and risk. Both are important, but the second comes from the first: that is, risk control begins already when the trader really understands the psychological factors and takes them into account without starting to assess the risk itself.

I would like to specifically warn both experienced traders and beginners about this: to look at the records with the motivations for their actions, reflecting on them philosophically - this goes without saying. But the real touchstone is practice, active trading under tough conditions. So get down to business without haste. Think about every trade. Why did you want to join it? How did you lead her? Did she succeed? Why? Failed? Why? Write down your findings and reread your notes before any new trade.

At all major CompuTrac seminars I try to get the presenter to talk to the listeners about the psychological aspects of trading as well. After all, who mercilessly reaps the trading benefits of a trader? Who takes the profit? Not some mysterious "he" or the ubiquitous "they", but the trader himself when confused. Remember what Medea said before she killed her own children? She said she knew what she was doing, but she couldn't handle her thoughtless self. If your trading mindset is in tune with that feeling, then this book is definitely for you.

Reading it is a pleasure. My own path to insight lay through thorns. And I recognize myself, walking through them, on the pages of this book: but this is said about me! And here - again about me! Mark's book is a carefully constructed, detailed logical dialogue. You read - and it seems as if you are not reading, but listening to the author, sitting next to him, and he explains in a friendly way what you do not understand.

Listen to his instructions - you will not regret it. You are lucky: after all, you have been given time to know yourself and master your craft now, when you, I hope, have not yet made a big mistake. Who does not spare time for reflection and training, he is likely to succeed and, of course, survive.

Timothy Slater

The head of the company

CompuTrac Software, Inc.

Foreword

This book serves as a comprehensive guide for those who want to understand how (psychologically) a person controls himself and changes his character. Such work on oneself is necessary to succeed in the stock or futures market. The book will help the reader step by step to successfully adapt to the special psychological properties of the market environment.

I say "adapt" because most of those who venture into this environment think that it is not much different from the one in which they grew up. But who does not see the difference will not see another: many of the concepts that he has learned in order to successfully operate in ordinary society will turn into psychological barriers in the market. Therefore, it will be extremely difficult to succeed there. To achieve the desired trading heights, you will have to at least somewhat (if not in many ways) relate to market actions differently.

Unlike any other social environment, the market is in many ways such that it requires those who want to succeed in it to be very rigid in their hands and rely almost entirely on themselves. But many of us, alas, do not know how to do this: after all, in childhood we learned how to fit into a society where there is a way and order.

Then our behavior was monitored by a person endowed with power over us. He had to manage us so that we behave according to the rules of this society.

So we simply forced to do the right thing, either encouraging or punishing. We were encouraged by giving freedom of action in the indicated direction. We were punished by depriving us of something we wanted, inflicting mental pain, or subjected to corporal punishment, inflicting physical pain. Where can such science lead? As a rule, to one thing: to obedience out of fear of suffering mentally or physically from someone (or something) that seems to us stronger. It turned out that we were forced to put ourselves at the disposal of others. But how, in this case, to achieve their own goals, without changing the concepts laid down by others? Obviously change the means to achieve them. This is how many of the traditional paths to prosperity developed. And so there was a concept that to get power is the only way to get what you want: after all, having power over the world around you, you can manage and change it in your own way.

But those who go into traders need to learn one thing: what for everyday life is a skillful calculation, in the market - a miscalculation. To put pressure on the market, to manage it in order to get your own from it - only a few can do this. In addition, in the market - unlike ordinary society - there are no external brakes: no one and nothing will stop a person there. The market can neither put pressure on him nor control him at all; the market does not care how a person behaves and whether he succeeds in business.

But since a person cannot command the market, and the market cannot command a person at all, then he himself is responsible for his emotions and actions. The only thing he can control is himself. In addition, he - as a trader - can manage his money, that is, provide them either for himself or for others. Which path he chooses to do this depends on a number of psychological factors that have little to do with the market itself. And a person will do this until he acquires some new skills and learns to fit into the framework of the real conditions that have developed in the market environment.

To succeed there, you will have to learn self-control techniques that may be completely alien to you. In addition, you need