Book Review – Trading in the Zone

Trading book: Trading In The Zone - Master the market with confidence, discipline and a winning attitude, by Mark Douglas, published by the New York Institute of Finance and Prentice Hall, 2000, ISBN 0-7352-0144-7.

Opening statement: “…95% of futures traders LOSE ALL OF THEIR MONEY WITHIN THE FIRST YEAR OF TRADING. Stock traders generally experience the same results.” That’s the way the book begins, on the first page of the Forward. (The caps are mine because they shocked me so!) Also, when I thumbed through it for the first time, what struck me was that here was a trading book of over 200 pages which didn’t have A SINGLE CHART IN IT!

A summary of the read: Trading is something that I DO, but its effectiveness depends mainly upon who I AM. This is book, not at all about trading strategies or techniques, but about the psychology of trading necessary to achieve consistent profits.

SELF-CONFIDENCE, SELF-TRUST AND SELF-SECURITY are keys to becoming a successful trader. They are built up by………..

1. Having an EDGE. An edge is a set of written trading plans which are clear, concise and comprehensive and which follow the LAWS OF PROBABILITY.

2. COMMITTMENT to those trading rules ensures that I’ll RESPOND to what the market does with my trades, not REACT. (A response is a predetermined action based on intelligent thinking. While a reaction is an automatic action based on emotion.) I can mentally shift ‘responsibility of the outcome of those trades’ to my rules!

3. Working the LAW OF HOMOGENEITY to our advantage. This natural law says, “The way we do one thing is the way we do everything.” It relieves us of trying to force ourselves to do things that really don’t fit our psyches because we will sculpture a trading system that goes hand-in-hand our unique personality and natural strengths. Trading becomes, then, a JOY because I can just ‘be myself.’

4. Releasing of EXPECTATIONS of the market and others and an ADDICTION TO CONTROL of people, things and outcomes of events.

5. Building upon a list of ‘SUCCESSFUL’ trades.

About the author: You’ll find that Mr. Douglas has also written what is described as an industry classic, The Disciplined Trader and that he has developed products to help futures and stock traders to master the unique psychological trading discipline necessary to trade consistently and successfully.

My conclusion: : I found the book quite encouraging and, as a person with a formal education in educational psychology, technically accurate. One DOES need to accept full responsibility for one’s trading success or failure, based on his own thinking and mental habits and refrain from blaming anything or anyone else for his own failures or shortcomings.

*******************
Your comments are invited.