Zone Trading. Beating the market through confidence, discipline and a mindset for success. Mark Douglas

dedication
This book is dedicated to all the traders I have had the pleasure of working with as a trading mentor over the past 18 years. Each of you, in some way, has contributed a guide, which this book can be for anyone who wants to trade with confidence, discipline, and a steady state of mind.

Foreword
The great bull trend in the stock market triggered an equally serious bull trend in the book market - a huge number of books were published on the topic of making money through trading in the markets.

The intellectual space adjacent to the sphere of financial markets is teeming with ideas, some of them are quite original, others are secondary and represent the old content in a new wrapper. However, sometimes there are authors whose originality and originality of thinking contrasts sharply with the general background. Один из таких людей - Mark Douglas.

Mark Douglas' book "Zone Trading" is the fruit of many years of reflection and practical work in the markets. This is a real treasure trove of knowledge for those of us who consider trading to be our profession.

Zone trading is a comprehensive look at the difficulties faced by a person who has accepted the challenge of the financial markets. For a beginner, there is only one problem - to find a way to make money. But when it comes to understanding that the matter is not limited to the tips of brokers, and the rationale for buying or selling is, in fact, an extremely difficult matter, a person either starts developing his own trading strategy, or tries to acquire it for money. It seems that having a strategy will solve all problems and make trading the markets an easy task, right? You just need to follow certain rules, and the money will pour on you like a river.

At this stage, and perhaps earlier, the beginner comes to the realization that trading can become one of the most depressing and daunting experiences of life. Related to this is that, according to statistics, 95 percent of futures traders lose all their money in their first year of trading. Trading results of traders on the stock market is about the same. Therefore, stock market experts constantly point to the inability of most traders to go beyond the banal “buy and hold” investment scenario.

So why do people who are so successful in other areas suffer devastating losses in trading? And in general, are successful traders born or made? Mark Douglas' answer to this question is unequivocal: they become successful traders. According to him, a person needs to master the trading mindset. At first glance, everything is quite simple, but in reality, the direction of the trader's thoughts is far from the worldview familiar to most people.

The relative rate of 95 percent smashed in the market can be explained if we take into account that people use in life the skills and habits acquired in childhood. When it comes to trading, everything that has helped you get high grades in school, move up the career ladder and build relationships with other people over the years becomes useless. It turns out that traders must learn to think in terms of probabilities, while sacrificing all the skills gained to achieve success in all other areas of life. Mark Douglas учит именно этому. He wrote an extremely useful book for traders. It is based on many years of experience in trading in the financial markets and working as a trader's mentor in Chicago; помимо прочего, Mark Douglas является автором ряда публикаций и регулярно читает лекции по психологии трейдинга, на которую у него имеется свой собственный взгляд.

What else can be added here? I hope you enjoy reading Zone Trading and develop your trading mindset in the process.

Thorn Hartle
Introduction
The goal of every trader is to make a profit on a regular basis, but only a few are able to consistently make money in the market. What separates this small group of successful traders from the mainstream? In my opinion, psychology should be considered the decisive factor, since the originality is inherent in the way of thinking of accomplished traders.

I started trading in 1978. During that period of my life, I ran an insurance agency, whose office was located in the suburbs Detroit. My career developed very successfully, and I thought that I could be a winner in trading as well. But, unfortunately, it didn't work out. By 1981, I was so annoyed with my inability to trade the market and do other things at the same time that I moved to Chicago and became a broker for Merrill Lynch on the Chicago Board of Trade. What came of it? Nine months after moving to Chicago, I lost everything I had. This was the result of combining my trading activities and a crazy lifestyle, which took all the money earned in the market.

This early trading experience taught me a lot about myself and the role of psychology in trading the financial markets. All this led to the fact that in 1982 I began to write my first book: The Disciplined Trader. Developing a Winning Attitude” (The Disciplined Trader: Developing Winning Attitudes). Getting started, I could not have imagined how difficult it would be to write a book whose purpose was to explain intelligibly what I understood about myself, and in such a way that it could be used by other people. I thought the book would be ready in six or nine months. In fact, the work lasted seven and a half years, the book was published in 1990 by Prentice Hall.

In 1983, I left Merrill Lynch and founded my own consulting company, Trading Behavior Dynamics, within which I still develop and conduct seminars on the psychology of trading, being what is commonly called a trading coach. Behind me are countless presentations of trading companies, clearing houses, brokerage houses and banks, organizing investment forums around the world. I have dealt extensively on a one-to-one basis with almost all types of traders, including some of the biggest stock traders on the stock exchanges, hedgers, options traders, technical analysts, and newbies as well.

Before writing this book, I spent 17 years studying the psychological side of trading, which led to the development of effective training methods aimed at achieving sustainable trading success. It came to me that the fundamental problem is the way we think. He is inherent something that is completely inconsistent with the characteristics of the functioning of the market.

Success is achieved only by those traders who have confidence in their actions and confidence in themselves, which together allows them to do the right things without any hesitation or doubt. They are not afraid of the randomness of market movements. They have learned to focus on information that helps identify profit opportunities and not dwell on news that feeds fear.

It may sound a bit complicated, but it all comes down to realizing the following: (1) you don't need to know what will happen in the market the next moment in time to make money; (2) anything can happen; (3) every moment in the market is uniform, so any particular case and result is unique and unrepeatable in its own way. A deal either works or it doesn't. In any case, you will be waiting for a new opportunity to enter the market and will again and again go through the process of opening and closing a position. This approach allows you to methodically and systematically understand what works and what does not lead to the desired outcome. And most importantly, you will be able to gain self-confidence, thanks to which you will avoid damaging actions in an aggressive market environment.

Most traders refuse to believe that the root of their problems lies in the way they think, or, to put it bluntly, in what and how they think when they trade. In my first book, The Disciplined Trader, I outlined the mental problems a trader faces and built a system of reasoning to understand their nature and the reasons why these problems arise at all. When writing the book Trading in the Zone, I had five goals:

• to prove to the trader that analytics, no matter how sophisticated it may be, cannot be considered a panacea for resolving trading-related difficulties;

• convince the trader that the results of trading are determined by his way of thinking and his attitude to trading;

• to prove to the trader that in order to form the mindset of a winner, or the so-called probabilistic mindset, certain beliefs and life position are required;

• pay attention to the many conflicts, inconsistencies and paradoxes in thinking that can lead to the fact that a trader may think that he has already learned probabilistic thinking, although in reality this is not so;

• guide the trader on a path where he can integrate his thinking strategy into the functional level of his thinking.

(Note: Until recently, the majority of traders in the market were men, but now there are more and more women joining our ranks. Therefore, to avoid confusion and embarrassment, I will use the pronoun he for naming traders in this book. Do not count this some kind of prejudice.)

The book "Zone Trading" presents a serious psychological approach, which should contribute to the achievement of stable results in your trading. I do not offer a ready-made trading system, my interest lies in a completely different plane - to show how to think in order to become a consistently successful trader. I assume that you already have an effective trading system in service. You