Insights from Mark Douglas on Trading

Hey guys, welcome back to the Desire2Trade channel. So it's Friday here, Friday morning, and I like to keep it light on Friday, do a lot of development work, do a lot of journaling, reviews, things like that. You know, if there's an occasional trade here and there, I'll take that. Hopefully, if I'm green, I want to lock that in as well. So today I have an interesting video. I'm going to do some background video search on Mark Douglas, you know, the infamous disciplined trader trading in the zone. Some of the great greatest books that I've read. Trading the Zone has been like a reference book for me for years. I've probably read it a dozen times and stuff, marked it all up and everything. So he did an interview several years back with a company called Wise Trade. It's a little bit grainy, but how about we walk through it and we'll focus on some of the magic that Mark Douglas can bring to light. So let's get to it. One of the things, one of the main things, one of the main issues that I see all the time is that people don't use their method to its full potential. In other words, there's a negative correlation between what the trader ends up with and what he could have had if he just followed his methodology. In your DVD program you refer to this as the profit gap. This is a problem you refer to as the profit gap and I think it's one of the least understood concepts. Can you address this a little bit? This profit gap? Yeah, that's actually a really good place to start because I think that more than anything, what your viewers want or what your customers want are consistent results. They want to be able to produce an income that they can rely on from their trading. And I'm sure that many of your viewers have already realized that getting a steady income is not such an easy task. So what makes consistency so challenging? What's the big hurdle? Well, obviously we're going to get into that, but at the most general level, I'm going to say that it requires learning the type of skills that people just simply aren't used to learning. Mental skills. Mental skills, yeah, exactly. In other words, it requires mental skills. Most people assume that because their technical method gives them a signal to get into a trade, that if the method produces a high percentage of winners, it will equate to a consistent income, not taking into consideration that the proper execution of those signals requires mental skills. Give us an example of this. Well, take for an example, you know, a high school basketball player who, you know, he'll go in the gym and practice throwing his free throws, maybe for even two or three hours a day. It wouldn't be unusual for him to be able to hit 50 in a row, would it? I mean, that's not out of the realm of reality, right? Okay, so the problem is that could he even hit two in a row? If the circumstances were he was in the final game of the NCAA championship, his team is down one point, there's only a few seconds left on the clock, and he was just fouled. Changed everything. Yeah, under those circumstances, without the appropriate mental skills, hitting either one of those free throws is very unlikely. And regardless of how well someone could do it in practice, most people would choke. So really the skills you're referring to, what you're talking about, Mark, is actually staying focused on the process, staying positively focused on the process itself, in this case of throwing the ball, in our case obviously of trading or following your method, and not being worried about blowing it, about the consequences of what could happen if this trade goes wrong. Exactly right. Just like what I'm going through right now. Trying to stay focused on the process of this presentation and not blowing it. You and me both, Mark. But we've all been there. I mean, you know, it's right. It's about really he's referring to in the basketball analogy, the demo versus sort of live and live in a, you know, with a pretty decent size. So all been there. I'm really looking forward. I want to see more of what he has to say. This is great. Anyway, you know, with training, we may have a technical method telling us what to do and giving us the potential to generate consistent results. But like the basketball player, without developing the appropriate mental skills, it's unlikely we'll be able to do what our method or training plan is indicating, indicating without making a number of potential execution errors. In other words, to stay positively focused on the process of training by doing exactly what we need to do, when we need to do it, without hesitation, reservation, or fear. Okay. I mean, I'm so glad we're recording. Hey, by the way, members, this is the next six months of mastermind calls for your members. I mean. What a chunk of stuff that he just nailed on this. I mean, great stuff. We're going to digest it in a minute, but this is great. consistent results if we're susceptible to making the kind of mental errors that you're talking about here. Okay. Exactly right. That's exactly what I'm saying. And all the mental errors I just listed are the result of thinking, believing, or assuming that our technical method is telling us what's going to happen next on a trade by trade basis and not understanding that technical methods aren't designed to do that. Technical methods and patterns are designed to put the odds of success in our favor over a series of trades. It may not seem like it on the surface, but there's some profound psychological implications here. What this means is the outcome of the signals generated by any technical method on a trade by trade basis. basis are unique and random. In other words, there's no way to know in advance what the outcome to any particular signal will be or what the sequence of wins or losses will be over a series of trades. It's a mouthful. I mean, no, let's bow to Mr. Doug. This is amazing. I mean, I'm so glad he brought this up. And I was like, and it's a two hour interview. And obviously, we're going to chop it up. But I was hoping he would cover this whole idea of series of trades. And, you know, what irks me as, you know, a teacher, a coach, and even a fellow trader is when some traders get a little granular and saying like, well, I had a good week, you know, two and oh and i had two and oh today or three and one and and it's you know it's not a series you know and like he says technical analysis doesn't tell you anything crap about the next trade it's about a series of trades it sort of normalizes let's see if he goes a little deeper And I understand what you're saying. I think, you know, we need to, first of all, know that many of our viewers out there are experiencing the same sort of thing. Okay. And they're probably going to have some trouble grasping this concept that by accepting the randomness of these outcomes, they can produce consistent results. That's an odd concept. Yeah, but that's exactly what I'm saying, Jared. I know it's somewhat of a paradox to think that events that have a random outcome can produce a consistent result. But think about it. This is the principle that's been used by casinos for hundreds of years. Right. Technical methods and patterns will give the individual trader the same kind of advantage the casino has. casino has over the individual player. If the trader can think about it from the proper perspective. On the other hand, if a trader who has generated his signal from a technical method hasn't learned to integrate this principle, this randomness principle into his trading regimen, he'll undoubtedly find that trading can be one of the most frustrating, if not exasperating endeavors he's ever chosen to undertake. I mean, I'm on the edge of my seat right now. This is so cool. There's the secret sauce, right? You want the holy grail? There you go. There's the secret sauce. And I love this casino analogy because we talk about it a lot, but Really, that casino analogy, their structure is just proven time and time again. I mean, large quantities of people with a slight edge, and the numbers will play out. It's just great. I love it. No, I know, and that's why we're here explaining it right now. You see, the frustration comes from expecting, from our expectations, it's from expecting something from our technical method. It just can't do. Technical methods define and identify patterns in collective human behavior. Now, the patterns definitely exist. They repeat themselves over and over again. The problem is the outcomes don't always correspond with the patterns on a trade by trade basis. So what I'm saying is that, yes, we have patterns. Yes. And they repeat themselves over and over. And our minds just naturally think, well, I have a pattern that's consistent. I should have an outcome that's consistent with the pattern. And that's not what I'm saying at all. What I'm saying is that there doesn't have to be a relationship between the outcome and the pattern. I mean, I'm going to pause right here, too. In risk management, we have this concept called the central limit theorem. And he's kind of basically saying it without getting too technical. But again, great stuff. Let's go. And if the last trade was a winner, this trade, even if the charts are the same, even if we've got the same exact signal, the same looking chart, there's no guarantee that this trade is going to be the exact same as the past one. Exactly. In other words, this trade, the trade I'm in right now, could turn out to be a winner. And does that mean that the next trade is going to be a winner? Absolutely not. This trade I'm in right now could end up being a loser, and does that mean that the next trade is going to be a loser? No, absolutely not. This is interesting. I mean, I'm trying to, for us up here, you know, the goal, the main goal is obviously to take these concepts and reduce them down to the most simple of terms. So you know, let's again back up here for a second. There are traders out there using live trade every single day. They're getting the same exact patterns, okay? But what you're saying is even though the specific criteria is being used to identify the pattern, okay? Free signals, same criteria, same formula, same everything. Right. The outcomes to each signal have no relationship to one another. That's right. That's exactly what I'm saying. There's a random distribution between wins and losses over any sequence of trades that you might look at. And so, you know, and again, this is a very difficult concept to grasp, but it's really the traders who have grasped it, let's say, and learned how to think in what I call probabilities. They're the ones that don't experience the same kind of emotional trauma that the typical trader does because they're expecting something that just may not happen. So, for example, if... If this trade's a winner based on this particular trade I'm in right now, based on the exact same criteria that, you know, or let's say I'm in a trade right now or I'm getting into a trade right now and the exact same criteria exists in the market that did the last time, I'm going to naturally expect it to be a winner if it was a winner the last time. probably will naturally expect it to be a loser if it was a loser maybe the last time or we had two or three losers in a row. And this could be a source of frustration for traders. Oh, absolutely. In other words, if, yeah, and that's exactly what happens. It is a source of frustration because if I'm expecting it to be a winner and it turns out to be a loser, I'm going to be frustrated. I'm not going to be frustrated. I'm going to be disappointed and I may even feel betrayed depending on how much, you know, how much kind of energy that I put into the idea that the trade is going to be right. Well, how do we get over it? I mean, how does a trader take, you know, okay, so I've got all the things right. I've got my charts lined up. I've done everything I was supposed to do. How does the trader at least begin to accept these sorts of things, or how do they begin to remedy these issues? Well, we kind of have to get into the nuts and bolts of this, of just exactly how the markets work. Because I think that one of the big problems, one of the reasons why people have such a difficult time with this, is because their initial exposure to the markets themselves is through electronics. In other words, through electronics, there's a real disconnect between what you're actually participating in and what's causing you to want to participate in it in the first place. In other words, markets started as exchanges. And so when you trade, you traded at an exchange, so you know that all prices are people-generated events. Correct. And see, this is what people have to take into consideration. Everything happens because of what people believe. When you look at the nature of trading and break it down to its simplest components, what you have is everyone trying to do the same thing. There is no possible way that any of us can make money as traders, unless we can buy low and sell high, or sell high and buy low. Correct. Is there any other way, Jared? No. In every market. In every market. So basically, everyone's trying to do the same thing, are they not? Yes. Everyone is doing the same things. Now, the reason why we have price movement is because everyone has a different idea about what is high and what is low. Okay? So now I get exposed to a technical method. Now what does this technical method do? And this is the relationship that people need to grasp. If they grasp this relationship, then they can grasp this idea that you can take the same set of criteria and end up with random results. And it's this. It's like what people realized years ago is that you can take data points. In other words, data points meaning what you're doing is you're translating the human behavior, the human belief in. If I'm going to buy... Is that visual? No, it doesn't have to be visual. But it's like, it could be. Yeah, it started out being visual. It started out being chart patterns based on bar charts. But what you do is that if I'm going to... if I'm going to buy, it's because right now, let's say the last price is 10 and I put in an order to buy something at 10. Okay. It's because I believe that the market's going to go to 11 or it's going to go to 12. Certainly if I thought, or I believed it was going to go to nine, I would wait. Would I not? So the reason why I'm buying at 10 is because that's what I believe. In other words, in other words, you know, all price movement is based on people's belief about what's going to happen in the future. Yeah. And I'm really glad he's tapping into this. I know in trading the zone, he talks a little bit about it, but I didn't think he'd bring this up in the interview, but I mean, 80% of my trades are. really human psychology type things, like where they're going to panic, where things like that, where traders are wrong and where they're going to start to bail. I want to take advantage of that. So I'm glad he's tapping into it as opposed to just the sort of randomness series of trade stuff. This is, God, we're 15 minutes in. This is brilliant. What people have found is that using these data points into certain types of mathematical equations, you can find patterns in collective human behavior. And what these patterns mean is this, is that when this set of criteria is present in the market, that there is simply a higher probability than not. In other words, there's a higher probability or... going to call an edge, a higher probability of one thing happening over another, that people, that other people are actually going to come into the market and bid it higher from here or offer it lower from here. There's just, in other words, when the pattern is present, this collective pattern is present, it will repeat itself. But the problem is, is that it repeats itself on a random basis because even though... So the actual mathematical criteria is exactly correct or exactly the same. You can't. Mathematical models can't predict human beings. That's right. Mathematical models can't predict who the actual individuals who are going to come into the market and actually do it. In other words, it takes someone to do it. When you put on a trade, if you're not going to make your trade a winner by bidding the market, if you bought something by bidding the market. Using all of my money. Using all your money. If you bought something at $10, you could actually wipe out all the offers and bid it to $11 or bid it to $12 or bid it to $13. Now, the price is at $13. All the trades that you put on at $10 are winners, right? Best of all at $11 and $12. Yeah, but you're averaging up. But the point is, all the trades that you put on were winners. You actually made yourself a winner. But what I'm saying is that when you don't trade at that level, we are actually obliged. other traders to come in to buy something at a worse price than what we thought was low to make us winners. Okay. So this is a great point. And we all look at charts, we look at candlesticks, but really there's human behavior behind those candlesticks. And I'm glad Mr. Douglas is really bringing this to light is that that emotion that goes behind that, the chart is really just... put plotting a data point in a sense in a visual format but really there's people and we need those participants to help push it higher and you know like he says the trade before are different participants so how they're going to react it's basically pure random that's why this the mindset of series of trades works so well it's changed my career for sure when the pattern presents itself like okay i have an edge here when the pattern presents itself we don't have any idea of who is actually going to come into the market to do this for us. And so there's no point in analyzing. There's no point in judging. There's no point in trying to figure out whether it's going to work or not. It would be like, for example, if I said to you, Jared, I'm going to give you a coin, and this coin is weighted in a way where it's going to come up heads 70% of the time. Now, just because I know mathematically and statistically that this pattern of coming up heads 70% of the time exists, is there still any way for me to know the actual sequence to heads of tails? Of course not. It's an infinite... Well, no, I'm saying, do I know the sequence? In other words, I'm going to flip the coin 100 times, and statistically it's going to come up heads 70% of the time. come up heads 70% of the times, I still don't know which flips are going to come up heads. Which flips? It's not the times. Which ones? In other words, we flip the coin once, it comes up heads. Flip the coin twice, it comes up heads. The next one's tails, the next one's tails, the next one's tails. In other words, we could have streaks of heads or tails. We could have streaks in there. The point that I'm making is that there's no way to know the actual sequence. But at the end of the day we know we have 70%. So what that does, that obligates us, if we want to be able to trade our methodology in an effective fashion, to be able to utilize this methodology in a way where we can extract the maximum amount of profit that it makes available to us based on the pattern that it identifies, we have to do it in certain ways. In other words, our mind has to be free to be able to execute these trades without making trading errors. And the trading errors come from believing... believing that because the pattern is present, that it's going to give me a winning trade on this one. This trade is going to be a winner. You can't think that way. No, you can't think that way. That's the way the typical trader thinks. The typical trader thinks, I'm not going to put this trade on unless I think it's going to be a winner, or why would I do it? Okay. So this is a massive key takeaway. And just again, reinforcing the thinking that the pro traders think in series. They're not worried about that next trade. So when I hear traders, or maybe you think about, you put in your journal, like I crushed it today, I went three and O or two and one. it's kind of all bullshit. It's a series. So over a series of trades, and you may get into valid sampling. I'm not sure about that. But in the risk concepts, we look at valid samples, which have a certain standard deviation of success. So it has a 95% accuracy that the 70% will happen, will occur with different participants, blah, blah, blah. But that next trade, you don't know. It could be the 30%. It could be the 70%. It could be five losers in a row. But it doesn't matter because over a valid series, the concept is, at least in the math concept, is you'll have a 70% winning edge on strategies that have historical 70% winning edge. So why is everybody going crazy analyzing that day, those few days, those last two trades? It drives me nuts, but I'm glad Mark is bringing this. This is brilliant. Oh, my God. I'm so glad I'm doing this. One of the first things to be a successful trader that you have to learn of the fact of finding a good edge, meaning something that puts a pattern, a collective pattern that your edge identifies that puts the odds in your favor, that there's a higher probability of one thing happening over another once this pattern is present in the market, is that you have to learn how to think in probabilities. In other words, you have to get your expectations, you know, aligned with the way the market actually exists. And when you do, in other words, when you learn these kind of mental skills and you're able to execute your trades without fear and without hesitation, without analyzing or even without thinking for that matter, because you don't need to think. I'll give you an example. A professional trader, what a professional trader thinks about when there's an edge present is... Does he think about whether the edge is going to work? Absolutely not. Because he knows he has learned there's no point. There's no point in analyzing or judging or building a case for or against whether that trade is going to work. Because he understands the human component. But what he does think about is he thinks about the risk. How much do I have to risk? How far am I going to let the market go against this position to tell me that other traders are either going to come into the market and make me a winner or not? And he also has a plan for how he's going to take profits. What does a typical trader do? They don't have a plan. Or they think about the trade too much. They think about, is this going to be a winner? Is this going to be a loser for me? The exact opposite of the professional. So what the professional does is basically... And then once they make up their mind that it's a winning trade, they don't... They don't predefine the risk, do they? Right. And they also don't have a plan to take profits because they think it's going to go anywhere. And I don't want to talk about that. We're running out of the break here, but I want to talk about that on the other side. What you're saying is, the bottom line is, the professional sees the entry. He sees the pattern, whatever it is, the edge, enters it, not thinking, if I'm going to win or I'm going to lose, but has a money management strategy in place, knows exactly how much he wants to win or is willing to win, how much he's willing to lose or risk. Right. Does he put a cap on the upside? Does he put a cap on his website? Well, it's not a matter of a cap. It's a matter of his assessment of how much potential there is. In other words, see, the problem is on a winning trade, we're obligated in a sense to make these never-ending decisions as to what the risk-to-reward ratio is. In other words, as the market's going in my favor, what's the risk of finding out that it's going to go further? And that's why so many professional traders or people who teach trading advocate scaling out positions. Mark, this is all— By the way, Mark, you can defer anytime you want. This is fantastic. And I know there's a lot of—I'm going to be doing some editing here because there's a lot of breaks and references to wise trade or whatever. I'll cut all that out. So just, you know, be patient with the chops. But this is really good. I was diverting, again, going into the meat of that, you know, sort of randomness and series and things like that, and really making that distinction between pro traders and uh developing traders and quite honestly right most of the pro traders that i i oversee and coach uh even on the man side are they have win rates much less than 50 and seems like the newer and developing traders want strategies to have like 70 80. um again take it as you will risk management risk is linear it doesn't really matter richard dennis 5 win rate someone with a 90 win rate and a scalping thing can do well as well as long as they manage that understand that that That concept of you have to have two to one is just ridiculous, not just from a risk management perspective, but from a math perspective. So I think I'm going to take a break here. Let's probably do an edit and we'll see the next question where the interviewer goes next with Mark Douglas. Remember that the primary skill that we're talking about here is simply trading without fear. This is a trading skill. It is the primary skill that you will have to acquire to create consistency, to trade without fear. Oh, my God. This is great. I mean. Just in your face, Mark Douglas, trading in the zone, great stuff. Easier said than done. But for those traders who are developing and understand that maybe they have drawdown or maybe they blew an account in the past, listen to Mark. I mean, it's normal. It's part of the success process. So obviously, we want to do it where you lose very little and maybe with proper guidance, you don't have any blown accounts. But understand that it's almost part of the success process. for the most part, most of us have been through that. So brilliant stuff. Let's continue. In other words, what people need to understand is that how does believing in a random result affect your expectations. Because see, what we don't want is we don't want to get into trading with the possibility of being disappointed, with the possibility of being dissatisfied, or being even betrayed. Because a lot of traders feel that way. They really feel betrayed. And the problem is, is that when that potential exists, it has the effect of affecting the way that we see market information in detrimental ways. Because in other words, all of us have these mental pain avoidance mechanisms that affect our perception of information. So for example, if I'm in a losing trade and I got into this trade thinking I was going to be right. In other words, I did all my evaluation, I did all my analysis, I did my work, I built a case. It's like as the market is moving against me, I'm going to have the tendency to focus on information that tells me that I'm right and ignore the information that tells me that the market is actually trending against me. In other words, I can identify a trend, but I won't be able to identify that trend if I'm putting an inordinate amount of significance on the information that's telling me that I'm right. as opposed to ignoring the information that's telling me that I'm wrong. And see, overall, if we want to be consistent, the principle that we need to keep in mind is that to be consistent, we have to cut our losses and let our profits run. We have to make more on our winning trades than what we lose on our losing trades. And the problem is, is that if I'm susceptible to being disappointed or betrayed, meaning I get into a trade, you know, expecting it to do what I think it's going to do, it doesn't, regardless of the reason, if other traders don't buy into that reason, or if other traders don't have another reason to want to buy at a price that's worse than yours, you bought the stock at 10, someone's got to want to buy it at 11, someone's going to want to buy it at 12 and buy it at 13, and not only be able to buy it at 11, 12, and 13, and 14, they're going to have to take it. to take out all the offers, all the traders who think it's high. In other words, at 11, 12, and 13. And so if these people aren't coming into the market to do that, well, then whatever reason you thought you had might not be so good. And so that's why it's so critical to predefine your risk before you even get into a trade. And that's why professional traders don't think about it any other way, because they know it takes other people. My reason might be great, but if someone else isn't buying into it, what difference does it make? It doesn't matter, because it's not a winning trade. He went over real quick, but I mean, right. Pros just predefine your risk. That's it. And when they push the enter button, that's it. They let it play out. Yeah. great stuff and it really doesn't matter what you think and he mentioned you know earlier mark mentioned earlier about like you know less thinking um great stuff just predefine the risk go you need the participants to come in but if they don't that's that's why you predefine the risk And so, you know, and so if we have the susceptibility to be disappointed, what it does, it affects our perception of market information in a way that doesn't allow us to cut our losses. How do we make ourselves not susceptible? I mean, how can you shut up? By changing, yes, by changing your perspective on this, by really understanding. For an example, Jared, you ever played a slot machine? Yes. Okay. I don't like it. You don't like it? Okay. but I played it. Whatever reason you don't like it, it doesn't matter, okay? That's good that you didn't like it because it might make the example even better. Okay? You play a slot machine. When you put your money in the machine, let's say it's a quarter machine, okay? You put your money in the machine, you press the button, and the pattern indicating that there's a payoff doesn't show up. How do you feel? No. Well, do you feel betrayed? Do people feel betrayed by the machine? No, not at all. And why do you not feel betrayed by the machine? It's just a random... Oh, it's a random outcome. So, in other words, you went into it with the belief that you know that you're participating in an event with a random outcome. And as a result, your expectations about the outcome were in perfect alignment with the event itself. My expectation, believe it or not, was to lose. I know this sounds crazy, but when I put the quarter in, I thought, you know what, I'm probably going to lose this quarter. Yeah, exactly. Because the odds aren't exactly in your favor. And what trading systems can do is actually put the odds in your favor in a way where we own the machine, believe it or not. I mean, the whole role reverses if you learn to think about it correctly. In other words, if you understand that, you know, so for example, well, let me backtrack a little bit and say that most traders, you know, if you compare trading to a slot machine, the difference would be that with a slot machine, we can't play until we've accepted the risk. In other words, we actually have to take our money out of our pocket and put it in the machine or otherwise we can't play. So that implies that we've accepted the risk because the degree to which we have not accepted the risk, we wouldn't be able to put our money in the machine. That is our loss. The quarter is our loss. That's the risk. No, that's not our loss. That's just the risk. That's just how much we're willing to invest to find out if it's going to work. Okay? And then what we do is we wait for a pattern to show up. And if the pattern's a jackpot, great. If it's not, then we might be willing to put another quarter in the machine to find out if it is. The difference with trading, and this is where people's mental idea of what this is all about gets messed up. The difference with trading is that... the pattern shows up in the market. The pattern shows up first, okay? Then what we have to do is put up our money. Meaning, how much am I willing to risk to find out if it's going to work? But most traders, because they evaluate, because they judge, and because they analyze, they think that, and build a case for the pattern being right, they actually talk themselves out of believing that the risk even exists. They might give lip service to the idea of putting a stop in the market. Like some of those errors that I said in the beginning, how many people put stops in the market and take them out and then let what would have been a small losing trade go into a big losing trade? That's lip service, you see? Well, okay, I've been told over and over again I've got to put stops in the market, but they haven't really accepted the risk. Every day. Yeah, they haven't really, truly accepted the risk because they don't want to be wrong. And what they have to understand is that this is not a right or wrong game. This has nothing to do, trading a technical methodology or a technical pattern does not have anything to do with being right or wrong. So good. I'm so glad I'm doing this, right? Just reiterate what he's saying. This is so good. It has nothing to do with being right or wrong. We're just manipulating, we're taking advantage of edge and we're just playing it out with risk. You're putting the core in the machine. But accepting that and saying, well, I'm just going to assume, making the assumption based on my wrist that the seam. math, same numbers will play out again. It's really interesting how he talks about, you know, you know, again, being the casino, but the pro traders think they're the slot machine. I mean, that's what we do when we, you know, we'll let the player play, but we're just like, okay, we're just going to collect our, you know, our 70%. And we understand that there's going to be some times where a happy little couple comes to the machine and wins for the night. That's fine too. That's the randomness part. So I love the analogy. I mean, we hear so much, you know, play like the casino or trade like the casino, but I love the way he goes here with this. It's just an odds game. That's all it is. In other words, you get an edge, an edge that says, I've got the odds in my favor over a series of trades, but you've got to be able to take every single trade because you don't know the sequence to wins and losses. You got to be able to identify what your risk is. And that's simply how much am I willing to spend to find out if other traders are going to come into this market and bid it higher than my price or offer it lower than my price if I sold. That's all it means. And then of course you have to have a money management plan for how to pay consistent profits. Thank you, Mark, for reiterating my vision and thought. I'm actually very humbled right now. Which is another problem I want to say. Oh yeah, but see the thing is, when you change your perspective, when you change how you think about this, okay, it's like, I know there's a random outcome to these patterns. And so, I know it's not right or wrong, and so what potential do I have to get disappointed? No more potential than what you had to get disappointed by putting a quarter in a slot machine and it didn't come up. with a jackpot. See, this is the critical thing here, Jared. You've got to be able to change the way you think. What's the title of this program? Mind Over Markets? You've got to be able to change the way you think. And how does a trader do it? What are the steps? Obviously, by reading your books, by getting themselves immersed in your thinking, it's certainly a way to do that. Is there anything, from this point forward, a trader can begin to do, or thoughts that traders can try to add to the repertoire to begin to think like a professional trader, have that carefree state of mind? and start to change the way that they view the markets and their risk. Is there an exercise? Yeah, absolutely. I mean, there's an exercise in trading in the zone, exercises in how to think like a professional trader. And basically all it really takes, Jared, is simply a sincere willingness to do it. Honestly, God, it's just like anything else in our lives. When we realize that there's a particular goal that we have and there's a strong desire to achieve that goal, then we're going to take whatever steps we need to achieve it. Whether those steps are trading in the zone or how to think like a professional trader or some other methodology that people are more comfortable with or whatever, the point is that if someone really... you know, really sets their mind, any of us, when we really set our mind on getting something, we'll get there. You know, and I know maybe going a little off topic here, but one of the first things I do when I meet a trader and say, I'm really trying to look for their belief level. Like how much do they believe they can do this? And if they don't, it's okay. I mean, we could, we can work on that, but that has to come before any charts or, you know, technical analysis, things like that. So yeah, belief is a big part of it. So yeah. And I would also say, you know, when you go through those struggles and maybe he'll talk about it, but, you know, getting the demons that take you away from process out of your life, such as P&L on your screen and, and, you know, having daily dollar targets, things like that. So I'm not sure if he's going to go there, but you know, it's not easy in the beginning, but yeah, belief is so, so important. I mean, from the first session, if I get the hint that someone really believes they can do it and they're going to work hard, but also understand that, you know, there's, there's a curve to it. and they're going to have patience, I will literally bring them on my team even if they're not profitable. So let's see where it goes here. We will get there. But the difference is, like we started out in the beginning of the program, the difference with this is that what we have to set our mind at is how to change our mind. Okay? And that's why there's so many people who are so close to getting it but never really get beyond that threshold. Why can't it? Because people don't want to change it. It's that simple. People don't like changing. How can people get to the carefree state of mind that you talk about? By changing the way that they think. They've got to eliminate the potential to think that the market's going to disappoint them. They've got to eliminate the potential to think that the market's going to disappoint them. And the way they eliminate the potential is by understanding that trading is not about being right or wrong. It's a probability game. If you're trading technically. Now, I don't want to confuse people, but I've got to say something else. Is that traders do evolve. Got another half, by the way. Keep going. Got that long, honestly, guys. Oh, my. No, is that there are stages of development. In other words, and I think I started to talk about this in the last segment, is that there are stages of development. That we start out learning these fundamental skills, like learning how to think in probability, so that the market doesn't have this potential to cause us to feel emotional pain. We did everything we could. We had our edge. It didn't work out. That's right. And that's all it is. That's what it means. is that some of the traders didn't come into the market that had the same belief that you had, or the same conviction that you had about this market doing whatever it is you thought it was going to do. That's all it is. It's nothing more than that. So this is, I love it. So this is what you know, really, we preach. It's okay. Take the stop. Move on. Move on to the next trade in your series of trades. But somehow we get so bent over like every trade and every, oh, it didn't work. And I get a screenshot and, you know, Mike, and they start questioning my, you know, the strategy, whatever. It's why Mark Douglas is Mark Douglas. Love it. Learn to walk away. You have to learn to walk away. I mean, let's put it this way. How good do you think the average person is at predicting other people's behavior? Someone else's behavior. People aren't that good at predicting other people's behavior. Or even their own behavior for that matter, okay? They find themselves doing things that, what am I doing this for? And so how good are they going to be at predicting collective human behavior? Now, these methodologies that we have access to, these mathematical formulas, do that for us. But you have to understand that there's no possible way that these mathematical formulas mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades. In other words, what they're really saying is that I have the odds. So when I get a signal, when I get a signal from my methodology, at the very fundamental, most fundamental level, what this is telling me is that... Fresh cross. Is that fresh cross? I have, there's a higher, there's a high, or let's say, the odds are in my favor, the odds are in my favor that somebody, that somebody is going to come into the market. This is what the pattern means. The odds are in my favor that somebody is going to come into the market and bid it higher from here if I bought or offer it lower from here if I sold. That's all it's saying. Now, they're either going to come or they're not. And so, as a result, I don't look at this as being a right or wrong. I look at this as how much distance am I going to give the market to move away from my entry point to tell me that they're either going to come or they're not. And any further is not worth the money of finding out. It's not worth the cost of finding out. I mean, this is really interesting, right? It's not about being right or wrong. And I love where he goes there with that. Again, this is how many times now we're 40 minutes in, at least on the live tape, on how many times he's bringing up this series of trades, randomness thing. Don't worry about the next trade. It's really just we're just playing it out in a series. And you should journal like that, too. Don't just have like you could have individual trades, but have them like sort of clumped into a series. I know some traders sort of. of color code them or sort of gray shade them and the next series have you know like a white background and then have another gray series within their uh shaded within their series love it if you're able to take a hundred dollar loss and walk away and not fret too much about it not let's stress out your the rest of your trading day and not think about it maybe then you can say okay i'm willing to trade a more volatile stock and move to something like a 200 or 300 dollar loss etc is that an exercise you think oh absolutely yeah absolutely and that's what i suggest to people you know all the time especially you know i was doing coaching it's like and and when i was when i was doing coaching on an active basis i mean i was coaching some some pretty substantial money managers. And they'd get into a situation where they're on a pretty good losing streak. And often it required that they actually go back to a risk level that they hadn't, meaning that if they were trading 10,000 or 100,000 shares or willing to take half a million dollars or a million dollar hit on a trade, to get back to where they felt more in sync with the market, they may have had to go back and only trade 1,000 shares. And when you're working in a corporate situation like that with other traders, that's often a hard thing to do, but that's exactly what they needed to do. And by the way, and that's why they tapped the risk manager and firms to do that. top, top traders just go back to basic levels. Just kind of get your groove back, get your mojo, find out what it is. And maybe it's just, again, randomness, but is it randomness or is it the markets or is it the trader? And finding out at a low level is usually the optimal risk strategy. Usually it's not just, we encourage that for individual traders, but also it's in usually a lot of prop firms, corporate charters to do that with their traders. I suggest to people that, I mean, look at it this way. Paper trading, okay? A lot of people who teach trading say that, you know, there's no point in someone paper trading because there's oftentimes a huge difference between the results they'll experience paper trading and what they'll experience when they're real money on the line. Yeah, because there's no real money on the line. In other words, I'm sure there are probably a substantial number of viewers out there who can make consistent money, consistent money. money, following their methodology of paper trading, and then they start doing real trading, and everything changes, okay? Well, and so a lot of teachers have said, well, there's no point in paper trading because, you know, there's no correlation between the results. Well, that's not really true because what paper trading can do for people is very beneficial. One, it's a graphic demonstration. demonstration, graphic demonstration of the gap that exists in terms of mental skills that they need to acquire. In other words, it's a good way to familiarize yourself with your trading platform. It's a good way to really get confident with your methodology, but more so, it is a graphic representation of the mental skills that you don't have, that you don't have. That's an interesting concept. Love it. So in other words, how does someone convince themselves that they need those mental skills? Look at your paper trading in relationship to your real trading. Now, if there's, and a lot of this, even if people have learned to think in probabilities, which is what we've been talking about pretty much this whole time, even if people learn to think in probabilities, it doesn't mean that they can really still accept the loss. Right. Because, Because the way our minds think, in other words, if I have to take a loss on this trade, it could have the tendency to tap me into all the accumulative kind of negative pain of every time I've had to take a loss in my life. And it just doesn't mean in trading. It could mean pets or people and that sort of thing, or jobs. And so because our minds have these tendencies to associate, it can make it difficult to accept the loss. So a lot of times what people would have to do, and they also would find difficult to do because a lot of times people get into trading because they want to impress their friends or their family like I'm a trader. But what they might have to do is that when they graduate from paper trading, they might just, you know, the amount of risk tolerance I have might only be just 10 shares. and risking a buck on those 10 shares. And you think, well, what's the point of that? Well, the point of that is that, you know, when you can trade those 10 shares flawlessly based on whatever your methodology says and do it without any fear or-Because you really make those trades in the paper. I mean, you made those trades in the paper. Then you can go to 20 shares and see how that feels. Then you go to 30 and gradually work your way up. And people aren't willing to gradually work their way up. This is a concept that we-I mean, and this is, we talk about our graduation plan, which started out small. And we get sometimes criticized, particularly in our scalping methodologies, where like, you know, make $20 a day. And, you know, we see the trolls like, oh, I- stupid to make $20 a day. I can make a thousand if I, you know, take bigger risks or something, but It's good to see he's sort of embracing the methodology. And he even hints, it even talks about, he mentions the word graduation, like graduating higher and higher, getting one toe in that water one at a time. Love it. And I'm saying this, and obviously it can't be done without that, but have you found that predominantly? out there, you know, in the people you've taught over the years, have people had to experience a high level of trauma before they can actually make the change? Or can someone just in normal course of every day with a little bit of dedication, actually, I'm not trying to be rhetorical. I really want a serious answer because there's people out there right now that I'm sure are thinking the same thing. Do I have to lose my whole account? Does this have to happen for me to make it? You're in pain right now, are you, Jared? I'm good. I've been out of the market. You mean like the gutter principle? Yeah. Is that what you're referring to? The gutter principle. The gutter principle. In other words, how much in the gutter do you have to be before you're willing to say, I'll do anything? As a matter of fact, you get this kind of bring something up is that when I was, when I was actively coaching, um, uh, my, my, coaching clientele basically fell into two broad categories one was with traders who were already successful who were already consistent and what they wanted were you know they wanted fine-tuning okay they want to creative ways of fine-tuning fine-tuning themselves so that they could actually increase their you know increase the amount of money that they make over over a year whatever and then you had the other group was was was there literally in the emotional gutter okay they're so exasperated they're so frustrated because of the potential that they it's so obvious what the potential is and yet there seems to be these these invisible barriers that keep them from getting into that getting into that potential that that they're they come to be to me saying, I'll do anything. Now, everyone has different tolerances of pain before they get to the point where they say, I'll do anything and mean it and be sincere and mean it. That's the whole thing. They got to mean it. Yeah. I mean, that's basically just explaining my career, but yeah. And you get that, like, I just want to do it. I'll work hard. I'll work hard. And it's not really about working hard. It's about understanding these concepts and learning them and understand that, you know, the psychology behind it. And, uh, you know just executing a plan again he says with flawlessness well flawlessness is 100 compliance but you can get away with you know 85 90 95 and still be successful with a strategy with that so let's see if he wraps up this segment here Mark, a couple of minutes to go. In this arena, is there anything, any message you can give to our traders that, or any final thoughts, maybe some mantra or something? No, just basically, just to kind of sum up what we've been talking about, that if consistent results are your objective, you know then you're going to have to learn how to think like a professional trader because that's what they do they make consistent results that's why that's why they're pros that's why people give them their money to manage that's why they have jobs that where they actually trade for a living because if they didn't make consistent results they wouldn't keep their jobs and so to do that you have to you have to you have to learn to change the way you think about trading in a way where it doesn't cause you to have this potential to think that you're going to be disappointed or betrayed or put you into a state of emotional pain. It's like getting that carefree state of mind. And once you get to that, once you shift your perspective, everything changes. It's not about being right or wrong. And when you really understand that, and then you go through the process of learning how to accept the risk of losing, then everything about your trading will change. I mean, a little end on there. I mean, what a wrap up. Yeah, that's it. I mean, it's not easy, I know, for developing traders, but that's what he's really describing. I mean. It's trading in the zone. When you're at that level, it's trading in the zone, being consistent. You have a strategy with a positive edge. You're executing with compliance, and you're just consistent. That equity curve is consistent over a series of trades. That means you're going to have drawdowns. The best traders do. I'm so glad that there's another hour, actually, to this, but I think I want to end it here and maybe a little tease if you want to see the other hour. I think he has some pretty good he takes Q&A, so I'm curious to see what that is. But we'll leave it here. I hope he got some nuggets out of this. It's really reinforced. This is like the best thing I've done, you know, on a Friday morning in some time. So Mark Douglas, thank you for all that you have done. You're gone too soon. We miss you. And boy, but you left such a legacy of, you know, inspiration and also just like core psychological frameworks. That's really without him in those books, I don't know where I'd be today. So thank you again. Put your comments below. What were some of the key... points that you resonated with, which ones you're struggling with. And maybe this is the first step in a journey to focus on the simplicity of the concepts of trading a zone about randomness and things like that. Maybe some of the individual trade talk will go away and we can move forward and just get more really cool traders in our world and community. So have a great one. Enjoy. And we'll see you next time. Thank you again, Mark. Douglas.

I'm going to do some background video search on Mark Douglas, you know, the infamous disciplined trader trading in the zone. Some of the great greatest books that I've read. Trading the Zone has been like a reference book for me for years. I've probably read it a dozen times and stuff, marked it all up and everything. So he did an interview several years back with a company called Wise Trade.

It's a little bit grainy, but how about we walk through it and we'll focus on some of the magic that Mark Douglas can bring to light. So let's get to it. One of the things, one of the main things, one of the main issues that I see all the time is that people don't use their method to its full potential.

In other words, there's a negative correlation between what the trader ends up with and what he could have had if he just followed his methodology. In your DVD program you refer to this as the profit gap. This is a problem you refer to as the profit gap and I think it's one of the least understood concepts. Can you address this a little bit? This profit gap?

Yeah, that's actually a really good place to start because I think that more than anything, what your viewers want or what your customers want are consistent results. They want to be able to produce an income that they can rely on from their trading. And I'm sure that many of your viewers have already realized that getting a steady income is not such an easy task. So what makes consistency so challenging?

What's the big hurdle? Well, obviously we're going to get into that, but at the most general level, I'm going to say that it requires learning the type of skills that people just simply aren't used to learning. Mental skills.

Mental skills, yeah, exactly. In other words, it requires mental skills. Most people assume that because their technical method gives them a signal to get into a trade, that if the method produces a high percentage of winners, it will equate to a consistent income, not taking into consideration that the proper execution of those signals requires mental skills.

Give us an example of this. Well, take for an example, you know, a high school basketball player who, you know, he'll go in the gym and practice throwing his free throws, maybe for even two or three hours a day. It wouldn't be unusual for him to be able to hit 50 in a row, would it? I mean, that's not out of the realm of reality, right? Okay, so the problem is that could he even hit two in a row?

If the circumstances were he was in the final game of the NCAA championship, his team is down one point, there's only a few seconds left on the clock, and he was just fouled. Changed everything. Yeah, under those circumstances, without the appropriate mental skills, hitting either one of those free throws is very unlikely. And regardless of how well someone could do it in practice, most people would choke.

So really the skills you're referring to, what you're talking about, Mark, is actually staying focused on the process, staying positively focused on the process itself, in this case of throwing the ball, in our case obviously of trading or following your method, and not being worried about blowing it, about the consequences of what could happen if this trade goes wrong. Exactly right. Just like what I'm going through right now. Trying to stay focused on the process of this presentation and not blowing it. You and me both, Mark.

But we've all been there. I mean, you know, it's right. It's about really he's referring to in the basketball analogy, the demo versus sort of live and live in a, you know, with a pretty decent size. So all been there. I'm really looking forward.

I want to see more of what he has to say. This is great. Anyway, you know, with training, we may have a technical method telling us what to do and giving us the potential to generate consistent results.

But like the basketball player, without developing the appropriate mental skills, it's unlikely we'll be able to do what our method or training plan is indicating, indicating without making a number of potential execution errors. In other words, to stay positively focused on the process of training by doing exactly what we need to do, when we need to do it, without hesitation, reservation, or fear. Okay. I mean, I'm so glad we're recording.

Hey, by the way, members, this is the next six months of mastermind calls for your members. I mean. What a chunk of stuff that he just nailed on this. I mean, great stuff. We're going to digest it in a minute, but this is great.

consistent results if we're susceptible to making the kind of mental errors that you're talking about here. Okay. Exactly right. That's exactly what I'm saying. And all the mental errors I just listed are the result of thinking, believing, or assuming that our technical method is telling us what's going to happen next on a trade by trade basis and not understanding that technical methods aren't designed to do that.

Technical methods and patterns are designed to put the odds of success in our favor over a series of trades. It may not seem like it on the surface, but there's some profound psychological implications here. What this means is the outcome of the signals generated by any technical method on a trade by trade basis.

basis are unique and random. In other words, there's no way to know in advance what the outcome to any particular signal will be or what the sequence of wins or losses will be over a series of trades. It's a mouthful. I mean, no, let's bow to Mr. Doug.

This is amazing. I mean, I'm so glad he brought this up. And I was like, and it's a two hour interview.

And obviously, we're going to chop it up. But I was hoping he would cover this whole idea of series of trades. And, you know, what irks me as, you know, a teacher, a coach, and even a fellow trader is when some traders get a little granular and saying like, well, I had a good week, you know, two and oh and i had two and oh today or three and one and and it's you know it's not a series you know and like he says technical analysis doesn't tell you anything crap about the next trade it's about a series of trades it sort of normalizes let's see if he goes a little deeper And I understand what you're saying.

I think, you know, we need to, first of all, know that many of our viewers out there are experiencing the same sort of thing. Okay. And they're probably going to have some trouble grasping this concept that by accepting the randomness of these outcomes, they can produce consistent results. That's an odd concept. Yeah, but that's exactly what I'm saying, Jared.

I know it's somewhat of a paradox to think that events that have a random outcome can produce a consistent result. But think about it. This is the principle that's been used by casinos for hundreds of years.

Right. Technical methods and patterns will give the individual trader the same kind of advantage the casino has. casino has over the individual player. If the trader can think about it from the proper perspective. On the other hand, if a trader who has generated his signal from a technical method hasn't learned to integrate this principle, this randomness principle into his trading regimen, he'll undoubtedly find that trading can be one of the most frustrating, if not exasperating endeavors he's ever chosen to undertake.

I mean, I'm on the edge of my seat right now. This is so cool. There's the secret sauce, right? You want the holy grail? There you go.

There's the secret sauce. And I love this casino analogy because we talk about it a lot, but Really, that casino analogy, their structure is just proven time and time again. I mean, large quantities of people with a slight edge, and the numbers will play out. It's just great.

I love it. No, I know, and that's why we're here explaining it right now. You see, the frustration comes from expecting, from our expectations, it's from expecting something from our technical method. It just can't do. Technical methods define and identify patterns in collective human behavior.

Now, the patterns definitely exist. They repeat themselves over and over again. The problem is the outcomes don't always correspond with the patterns on a trade by trade basis.

So what I'm saying is that, yes, we have patterns. Yes. And they repeat themselves over and over. And our minds just naturally think, well, I have a pattern that's consistent. I should have an outcome that's consistent with the pattern.

And that's not what I'm saying at all. What I'm saying is that there doesn't have to be a relationship between the outcome and the pattern. I mean, I'm going to pause right here, too.

In risk management, we have this concept called the central limit theorem. And he's kind of basically saying it without getting too technical. But again, great stuff. Let's go.

And if the last trade was a winner, this trade, even if the charts are the same, even if we've got the same exact signal, the same looking chart, there's no guarantee that this trade is going to be the exact same as the past one. Exactly. In other words, this trade, the trade I'm in right now, could turn out to be a winner.

And does that mean that the next trade is going to be a winner? Absolutely not. This trade I'm in right now could end up being a loser, and does that mean that the next trade is going to be a loser?

No, absolutely not. This is interesting. I mean, I'm trying to, for us up here, you know, the goal, the main goal is obviously to take these concepts and reduce them down to the most simple of terms.

So you know, let's again back up here for a second. There are traders out there using live trade every single day. They're getting the same exact patterns, okay? But what you're saying is even though the specific criteria is being used to identify the pattern, okay? Free signals, same criteria, same formula, same everything.

Right. The outcomes to each signal have no relationship to one another. That's right. That's exactly what I'm saying.

There's a random distribution between wins and losses over any sequence of trades that you might look at. And so, you know, and again, this is a very difficult concept to grasp, but it's really the traders who have grasped it, let's say, and learned how to think in what I call probabilities. They're the ones that don't experience the same kind of emotional trauma that the typical trader does because they're expecting something that just may not happen. So, for example, if... If this trade's a winner based on this particular trade I'm in right now, based on the exact same criteria that, you know, or let's say I'm in a trade right now or I'm getting into a trade right now and the exact same criteria exists in the market that did the last time, I'm going to naturally expect it to be a winner if it was a winner the last time.

probably will naturally expect it to be a loser if it was a loser maybe the last time or we had two or three losers in a row. And this could be a source of frustration for traders. Oh, absolutely.

In other words, if, yeah, and that's exactly what happens. It is a source of frustration because if I'm expecting it to be a winner and it turns out to be a loser, I'm going to be frustrated. I'm not going to be frustrated.

I'm going to be disappointed and I may even feel betrayed depending on how much, you know, how much kind of energy that I put into the idea that the trade is going to be right. Well, how do we get over it? I mean, how does a trader take, you know, okay, so I've got all the things right. I've got my charts lined up. I've done everything I was supposed to do.

How does the trader at least begin to accept these sorts of things, or how do they begin to remedy these issues? Well, we kind of have to get into the nuts and bolts of this, of just exactly how the markets work. Because I think that one of the big problems, one of the reasons why people have such a difficult time with this, is because their initial exposure to the markets themselves is through electronics. In other words, through electronics, there's a real disconnect between what you're actually participating in and what's causing you to want to participate in it in the first place. In other words, markets started as exchanges.

And so when you trade, you traded at an exchange, so you know that all prices are people-generated events. Correct. And see, this is what people have to take into consideration.

Everything happens because of what people believe. When you look at the nature of trading and break it down to its simplest components, what you have is everyone trying to do the same thing. There is no possible way that any of us can make money as traders, unless we can buy low and sell high, or sell high and buy low. Correct. Is there any other way, Jared?

No. In every market. In every market.

So basically, everyone's trying to do the same thing, are they not? Yes. Everyone is doing the same things. Now, the reason why we have price movement is because everyone has a different idea about what is high and what is low. Okay?

So now I get exposed to a technical method. Now what does this technical method do? And this is the relationship that people need to grasp.

If they grasp this relationship, then they can grasp this idea that you can take the same set of criteria and end up with random results. And it's this. It's like what people realized years ago is that you can take data points.

In other words, data points meaning what you're doing is you're translating the human behavior, the human belief in. If I'm going to buy... Is that visual?

No, it doesn't have to be visual. But it's like, it could be. Yeah, it started out being visual. It started out being chart patterns based on bar charts. But what you do is that if I'm going to...

if I'm going to buy, it's because right now, let's say the last price is 10 and I put in an order to buy something at 10. Okay. It's because I believe that the market's going to go to 11 or it's going to go to 12. Certainly if I thought, or I believed it was going to go to nine, I would wait. Would I not? So the reason why I'm buying at 10 is because that's what I believe. In other words, in other words, you know, all price movement is based on people's belief about what's going to happen in the future.

Yeah. And I'm really glad he's tapping into this. I know in trading the zone, he talks a little bit about it, but I didn't think he'd bring this up in the interview, but I mean, 80% of my trades are.

really human psychology type things, like where they're going to panic, where things like that, where traders are wrong and where they're going to start to bail. I want to take advantage of that. So I'm glad he's tapping into it as opposed to just the sort of randomness series of trade stuff.

This is, God, we're 15 minutes in. This is brilliant. What people have found is that using these data points into certain types of mathematical equations, you can find patterns in collective human behavior.

And what these patterns mean is this, is that when this set of criteria is present in the market, that there is simply a higher probability than not. In other words, there's a higher probability or... going to call an edge, a higher probability of one thing happening over another, that people, that other people are actually going to come into the market and bid it higher from here or offer it lower from here. There's just, in other words, when the pattern is present, this collective pattern is present, it will repeat itself.

But the problem is, is that it repeats itself on a random basis because even though... So the actual mathematical criteria is exactly correct or exactly the same. You can't.

Mathematical models can't predict human beings. That's right. Mathematical models can't predict who the actual individuals who are going to come into the market and actually do it.

In other words, it takes someone to do it. When you put on a trade, if you're not going to make your trade a winner by bidding the market, if you bought something by bidding the market. Using all of my money.

Using all your money. If you bought something at $10, you could actually wipe out all the offers and bid it to $11 or bid it to $12 or bid it to $13. Now, the price is at $13.

All the trades that you put on at $10 are winners, right? Best of all at $11 and $12. Yeah, but you're averaging up. But the point is, all the trades that you put on were winners. You actually made yourself a winner.

But what I'm saying is that when you don't trade at that level, we are actually obliged. other traders to come in to buy something at a worse price than what we thought was low to make us winners. Okay.

So this is a great point. And we all look at charts, we look at candlesticks, but really there's human behavior behind those candlesticks. And I'm glad Mr. Douglas is really bringing this to light is that that emotion that goes behind that, the chart is really just... put plotting a data point in a sense in a visual format but really there's people and we need those participants to help push it higher and you know like he says the trade before are different participants so how they're going to react it's basically pure random that's why this the mindset of series of trades works so well it's changed my career for sure when the pattern presents itself like okay i have an edge here when the pattern presents itself we don't have any idea of who is actually going to come into the market to do this for us. And so there's no point in analyzing.

There's no point in judging. There's no point in trying to figure out whether it's going to work or not. It would be like, for example, if I said to you, Jared, I'm going to give you a coin, and this coin is weighted in a way where it's going to come up heads 70% of the time. Now, just because I know mathematically and statistically that this pattern of coming up heads 70% of the time exists, is there still any way for me to know the actual sequence to heads of tails? Of course not.

It's an infinite... Well, no, I'm saying, do I know the sequence? In other words, I'm going to flip the coin 100 times, and statistically it's going to come up heads 70% of the time.

come up heads 70% of the times, I still don't know which flips are going to come up heads. Which flips? It's not the times. Which ones? In other words, we flip the coin once, it comes up heads.

Flip the coin twice, it comes up heads. The next one's tails, the next one's tails, the next one's tails. In other words, we could have streaks of heads or tails. We could have streaks in there. The point that I'm making is that there's no way to know the actual sequence.

But at the end of the day we know we have 70%. So what that does, that obligates us, if we want to be able to trade our methodology in an effective fashion, to be able to utilize this methodology in a way where we can extract the maximum amount of profit that it makes available to us based on the pattern that it identifies, we have to do it in certain ways. In other words, our mind has to be free to be able to execute these trades without making trading errors.

And the trading errors come from believing... believing that because the pattern is present, that it's going to give me a winning trade on this one. This trade is going to be a winner. You can't think that way.

No, you can't think that way. That's the way the typical trader thinks. The typical trader thinks, I'm not going to put this trade on unless I think it's going to be a winner, or why would I do it?

Okay. So this is a massive key takeaway. And just again, reinforcing the thinking that the pro traders think in series. They're not worried about that next trade. So when I hear traders, or maybe you think about, you put in your journal, like I crushed it today, I went three and O or two and one.

it's kind of all bullshit. It's a series. So over a series of trades, and you may get into valid sampling.

I'm not sure about that. But in the risk concepts, we look at valid samples, which have a certain standard deviation of success. So it has a 95% accuracy that the 70% will happen, will occur with different participants, blah, blah, blah. But that next trade, you don't know. It could be the 30%.

It could be the 70%. It could be five losers in a row. But it doesn't matter because over a valid series, the concept is, at least in the math concept, is you'll have a 70% winning edge on strategies that have historical 70% winning edge.

So why is everybody going crazy analyzing that day, those few days, those last two trades? It drives me nuts, but I'm glad Mark is bringing this. This is brilliant.

Oh, my God. I'm so glad I'm doing this. One of the first things to be a successful trader that you have to learn of the fact of finding a good edge, meaning something that puts a pattern, a collective pattern that your edge identifies that puts the odds in your favor, that there's a higher probability of one thing happening over another once this pattern is present in the market, is that you have to learn how to think in probabilities.

In other words, you have to get your expectations, you know, aligned with the way the market actually exists. And when you do, in other words, when you learn these kind of mental skills and you're able to execute your trades without fear and without hesitation, without analyzing or even without thinking for that matter, because you don't need to think. I'll give you an example. A professional trader, what a professional trader thinks about when there's an edge present is... Does he think about whether the edge is going to work?

Absolutely not. Because he knows he has learned there's no point. There's no point in analyzing or judging or building a case for or against whether that trade is going to work. Because he understands the human component. But what he does think about is he thinks about the risk.

How much do I have to risk? How far am I going to let the market go against this position to tell me that other traders are either going to come into the market and make me a winner or not? And he also has a plan for how he's going to take profits. What does a typical trader do? They don't have a plan.

Or they think about the trade too much. They think about, is this going to be a winner? Is this going to be a loser for me? The exact opposite of the professional. So what the professional does is basically...

And then once they make up their mind that it's a winning trade, they don't... They don't predefine the risk, do they? Right.

And they also don't have a plan to take profits because they think it's going to go anywhere. And I don't want to talk about that. We're running out of the break here, but I want to talk about that on the other side.

What you're saying is, the bottom line is, the professional sees the entry. He sees the pattern, whatever it is, the edge, enters it, not thinking, if I'm going to win or I'm going to lose, but has a money management strategy in place, knows exactly how much he wants to win or is willing to win, how much he's willing to lose or risk. Right.

Does he put a cap on the upside? Does he put a cap on his website? Well, it's not a matter of a cap.

It's a matter of his assessment of how much potential there is. In other words, see, the problem is on a winning trade, we're obligated in a sense to make these never-ending decisions as to what the risk-to-reward ratio is. In other words, as the market's going in my favor, what's the risk of finding out that it's going to go further?

And that's why so many professional traders or people who teach trading advocate scaling out positions. Mark, this is all— By the way, Mark, you can defer anytime you want. This is fantastic.

And I know there's a lot of—I'm going to be doing some editing here because there's a lot of breaks and references to wise trade or whatever. I'll cut all that out. So just, you know, be patient with the chops.

But this is really good. I was diverting, again, going into the meat of that, you know, sort of randomness and series and things like that, and really making that distinction between pro traders and uh developing traders and quite honestly right most of the pro traders that i i oversee and coach uh even on the man side are they have win rates much less than 50 and seems like the newer and developing traders want strategies to have like 70 80. um again take it as you will risk management risk is linear it doesn't really matter richard dennis 5 win rate someone with a 90 win rate and a scalping thing can do well as well as long as they manage that understand that that That concept of you have to have two to one is just ridiculous, not just from a risk management perspective, but from a math perspective. So I think I'm going to take a break here. Let's probably do an edit and we'll see the next question where the interviewer goes next with Mark Douglas. Remember that the primary skill that we're talking about here is simply trading without fear.

This is a trading skill. It is the primary skill that you will have to acquire to create consistency, to trade without fear. Oh, my God. This is great. I mean.

Just in your face, Mark Douglas, trading in the zone, great stuff. Easier said than done. But for those traders who are developing and understand that maybe they have drawdown or maybe they blew an account in the past, listen to Mark.

I mean, it's normal. It's part of the success process. So obviously, we want to do it where you lose very little and maybe with proper guidance, you don't have any blown accounts.

But understand that it's almost part of the success process. for the most part, most of us have been through that. So brilliant stuff. Let's continue. In other words, what people need to understand is that how does believing in a random result affect your expectations.

Because see, what we don't want is we don't want to get into trading with the possibility of being disappointed, with the possibility of being dissatisfied, or being even betrayed. Because a lot of traders feel that way. They really feel betrayed.

And the problem is, is that when that potential exists, it has the effect of affecting the way that we see market information in detrimental ways. Because in other words, all of us have these mental pain avoidance mechanisms that affect our perception of information. So for example, if I'm in a losing trade and I got into this trade thinking I was going to be right. In other words, I did all my evaluation, I did all my analysis, I did my work, I built a case.

It's like as the market is moving against me, I'm going to have the tendency to focus on information that tells me that I'm right and ignore the information that tells me that the market is actually trending against me. In other words, I can identify a trend, but I won't be able to identify that trend if I'm putting an inordinate amount of significance on the information that's telling me that I'm right. as opposed to ignoring the information that's telling me that I'm wrong.

And see, overall, if we want to be consistent, the principle that we need to keep in mind is that to be consistent, we have to cut our losses and let our profits run. We have to make more on our winning trades than what we lose on our losing trades. And the problem is, is that if I'm susceptible to being disappointed or betrayed, meaning I get into a trade, you know, expecting it to do what I think it's going to do, it doesn't, regardless of the reason, if other traders don't buy into that reason, or if other traders don't have another reason to want to buy at a price that's worse than yours, you bought the stock at 10, someone's got to want to buy it at 11, someone's going to want to buy it at 12 and buy it at 13, and not only be able to buy it at 11, 12, and 13, and 14, they're going to have to take it.

to take out all the offers, all the traders who think it's high. In other words, at 11, 12, and 13. And so if these people aren't coming into the market to do that, well, then whatever reason you thought you had might not be so good. And so that's why it's so critical to predefine your risk before you even get into a trade.

And that's why professional traders don't think about it any other way, because they know it takes other people. My reason might be great, but if someone else isn't buying into it, what difference does it make? It doesn't matter, because it's not a winning trade.

He went over real quick, but I mean, right. Pros just predefine your risk. That's it.

And when they push the enter button, that's it. They let it play out. Yeah. great stuff and it really doesn't matter what you think and he mentioned you know earlier mark mentioned earlier about like you know less thinking um great stuff just predefine the risk go you need the participants to come in but if they don't that's that's why you predefine the risk And so, you know, and so if we have the susceptibility to be disappointed, what it does, it affects our perception of market information in a way that doesn't allow us to cut our losses.

How do we make ourselves not susceptible? I mean, how can you shut up? By changing, yes, by changing your perspective on this, by really understanding.

For an example, Jared, you ever played a slot machine? Yes. Okay.

I don't like it. You don't like it? Okay.

but I played it. Whatever reason you don't like it, it doesn't matter, okay? That's good that you didn't like it because it might make the example even better. Okay? You play a slot machine.

When you put your money in the machine, let's say it's a quarter machine, okay? You put your money in the machine, you press the button, and the pattern indicating that there's a payoff doesn't show up. How do you feel? No. Well, do you feel betrayed?

Do people feel betrayed by the machine? No, not at all. And why do you not feel betrayed by the machine? It's just a random... Oh, it's a random outcome.

So, in other words, you went into it with the belief that you know that you're participating in an event with a random outcome. And as a result, your expectations about the outcome were in perfect alignment with the event itself. My expectation, believe it or not, was to lose.

I know this sounds crazy, but when I put the quarter in, I thought, you know what, I'm probably going to lose this quarter. Yeah, exactly. Because the odds aren't exactly in your favor.

And what trading systems can do is actually put the odds in your favor in a way where we own the machine, believe it or not. I mean, the whole role reverses if you learn to think about it correctly. In other words, if you understand that, you know, so for example, well, let me backtrack a little bit and say that most traders, you know, if you compare trading to a slot machine, the difference would be that with a slot machine, we can't play until we've accepted the risk.

In other words, we actually have to take our money out of our pocket and put it in the machine or otherwise we can't play. So that implies that we've accepted the risk because the degree to which we have not accepted the risk, we wouldn't be able to put our money in the machine. That is our loss. The quarter is our loss.

That's the risk. No, that's not our loss. That's just the risk.

That's just how much we're willing to invest to find out if it's going to work. Okay? And then what we do is we wait for a pattern to show up.

And if the pattern's a jackpot, great. If it's not, then we might be willing to put another quarter in the machine to find out if it is. The difference with trading, and this is where people's mental idea of what this is all about gets messed up.

The difference with trading is that... the pattern shows up in the market. The pattern shows up first, okay? Then what we have to do is put up our money. Meaning, how much am I willing to risk to find out if it's going to work?

But most traders, because they evaluate, because they judge, and because they analyze, they think that, and build a case for the pattern being right, they actually talk themselves out of believing that the risk even exists. They might give lip service to the idea of putting a stop in the market. Like some of those errors that I said in the beginning, how many people put stops in the market and take them out and then let what would have been a small losing trade go into a big losing trade? That's lip service, you see? Well, okay, I've been told over and over again I've got to put stops in the market, but they haven't really accepted the risk.

Every day. Yeah, they haven't really, truly accepted the risk because they don't want to be wrong. And what they have to understand is that this is not a right or wrong game. This has nothing to do, trading a technical methodology or a technical pattern does not have anything to do with being right or wrong.

So good. I'm so glad I'm doing this, right? Just reiterate what he's saying.

This is so good. It has nothing to do with being right or wrong. We're just manipulating, we're taking advantage of edge and we're just playing it out with risk. You're putting the core in the machine.

But accepting that and saying, well, I'm just going to assume, making the assumption based on my wrist that the seam. math, same numbers will play out again. It's really interesting how he talks about, you know, you know, again, being the casino, but the pro traders think they're the slot machine. I mean, that's what we do when we, you know, we'll let the player play, but we're just like, okay, we're just going to collect our, you know, our 70%. And we understand that there's going to be some times where a happy little couple comes to the machine and wins for the night.

That's fine too. That's the randomness part. So I love the analogy. I mean, we hear so much, you know, play like the casino or trade like the casino, but I love the way he goes here with this. It's just an odds game.

That's all it is. In other words, you get an edge, an edge that says, I've got the odds in my favor over a series of trades, but you've got to be able to take every single trade because you don't know the sequence to wins and losses. You got to be able to identify what your risk is.

And that's simply how much am I willing to spend to find out if other traders are going to come into this market and bid it higher than my price or offer it lower than my price if I sold. That's all it means. And then of course you have to have a money management plan for how to pay consistent profits. Thank you, Mark, for reiterating my vision and thought.

I'm actually very humbled right now. Which is another problem I want to say. Oh yeah, but see the thing is, when you change your perspective, when you change how you think about this, okay, it's like, I know there's a random outcome to these patterns. And so, I know it's not right or wrong, and so what potential do I have to get disappointed?

No more potential than what you had to get disappointed by putting a quarter in a slot machine and it didn't come up. with a jackpot. See, this is the critical thing here, Jared.

You've got to be able to change the way you think. What's the title of this program? Mind Over Markets? You've got to be able to change the way you think.

And how does a trader do it? What are the steps? Obviously, by reading your books, by getting themselves immersed in your thinking, it's certainly a way to do that.

Is there anything, from this point forward, a trader can begin to do, or thoughts that traders can try to add to the repertoire to begin to think like a professional trader, have that carefree state of mind? and start to change the way that they view the markets and their risk. Is there an exercise?

Yeah, absolutely. I mean, there's an exercise in trading in the zone, exercises in how to think like a professional trader. And basically all it really takes, Jared, is simply a sincere willingness to do it. Honestly, God, it's just like anything else in our lives. When we realize that there's a particular goal that we have and there's a strong desire to achieve that goal, then we're going to take whatever steps we need to achieve it.

Whether those steps are trading in the zone or how to think like a professional trader or some other methodology that people are more comfortable with or whatever, the point is that if someone really... you know, really sets their mind, any of us, when we really set our mind on getting something, we'll get there. You know, and I know maybe going a little off topic here, but one of the first things I do when I meet a trader and say, I'm really trying to look for their belief level. Like how much do they believe they can do this?

And if they don't, it's okay. I mean, we could, we can work on that, but that has to come before any charts or, you know, technical analysis, things like that. So yeah, belief is a big part of it.

So yeah. And I would also say, you know, when you go through those struggles and maybe he'll talk about it, but, you know, getting the demons that take you away from process out of your life, such as P&L on your screen and, and, you know, having daily dollar targets, things like that. So I'm not sure if he's going to go there, but you know, it's not easy in the beginning, but yeah, belief is so, so important. I mean, from the first session, if I get the hint that someone really believes they can do it and they're going to work hard, but also understand that, you know, there's, there's a curve to it.

and they're going to have patience, I will literally bring them on my team even if they're not profitable. So let's see where it goes here. We will get there.

But the difference is, like we started out in the beginning of the program, the difference with this is that what we have to set our mind at is how to change our mind. Okay? And that's why there's so many people who are so close to getting it but never really get beyond that threshold.

Why can't it? Because people don't want to change it. It's that simple.

People don't like changing. How can people get to the carefree state of mind that you talk about? By changing the way that they think. They've got to eliminate the potential to think that the market's going to disappoint them. They've got to eliminate the potential to think that the market's going to disappoint them.

And the way they eliminate the potential is by understanding that trading is not about being right or wrong. It's a probability game. If you're trading technically.

Now, I don't want to confuse people, but I've got to say something else. Is that traders do evolve. Got another half, by the way. Keep going.

Got that long, honestly, guys. Oh, my. No, is that there are stages of development. In other words, and I think I started to talk about this in the last segment, is that there are stages of development.

That we start out learning these fundamental skills, like learning how to think in probability, so that the market doesn't have this potential to cause us to feel emotional pain. We did everything we could. We had our edge. It didn't work out.

That's right. And that's all it is. That's what it means. is that some of the traders didn't come into the market that had the same belief that you had, or the same conviction that you had about this market doing whatever it is you thought it was going to do.

That's all it is. It's nothing more than that. So this is, I love it.

So this is what you know, really, we preach. It's okay. Take the stop.

Move on. Move on to the next trade in your series of trades. But somehow we get so bent over like every trade and every, oh, it didn't work. And I get a screenshot and, you know, Mike, and they start questioning my, you know, the strategy, whatever. It's why Mark Douglas is Mark Douglas.

Love it. Learn to walk away. You have to learn to walk away. I mean, let's put it this way.

How good do you think the average person is at predicting other people's behavior? Someone else's behavior. People aren't that good at predicting other people's behavior. Or even their own behavior for that matter, okay? They find themselves doing things that, what am I doing this for?

And so how good are they going to be at predicting collective human behavior? Now, these methodologies that we have access to, these mathematical formulas, do that for us. But you have to understand that there's no possible way that these mathematical formulas mathematical formulas can predict the outcome of these patterns on a trade by trade basis, only on a series of trades. In other words, what they're really saying is that I have the odds.

So when I get a signal, when I get a signal from my methodology, at the very fundamental, most fundamental level, what this is telling me is that... Fresh cross. Is that fresh cross?

I have, there's a higher, there's a high, or let's say, the odds are in my favor, the odds are in my favor that somebody, that somebody is going to come into the market. This is what the pattern means. The odds are in my favor that somebody is going to come into the market and bid it higher from here if I bought or offer it lower from here if I sold.

That's all it's saying. Now, they're either going to come or they're not. And so, as a result, I don't look at this as being a right or wrong. I look at this as how much distance am I going to give the market to move away from my entry point to tell me that they're either going to come or they're not. And any further is not worth the money of finding out.

It's not worth the cost of finding out. I mean, this is really interesting, right? It's not about being right or wrong. And I love where he goes there with that. Again, this is how many times now we're 40 minutes in, at least on the live tape, on how many times he's bringing up this series of trades, randomness thing.

Don't worry about the next trade. It's really just we're just playing it out in a series. And you should journal like that, too.

Don't just have like you could have individual trades, but have them like sort of clumped into a series. I know some traders sort of. of color code them or sort of gray shade them and the next series have you know like a white background and then have another gray series within their uh shaded within their series love it if you're able to take a hundred dollar loss and walk away and not fret too much about it not let's stress out your the rest of your trading day and not think about it maybe then you can say okay i'm willing to trade a more volatile stock and move to something like a 200 or 300 dollar loss etc is that an exercise you think oh absolutely yeah absolutely and that's what i suggest to people you know all the time especially you know i was doing coaching it's like and and when i was when i was doing coaching on an active basis i mean i was coaching some some pretty substantial money managers. And they'd get into a situation where they're on a pretty good losing streak. And often it required that they actually go back to a risk level that they hadn't, meaning that if they were trading 10,000 or 100,000 shares or willing to take half a million dollars or a million dollar hit on a trade, to get back to where they felt more in sync with the market, they may have had to go back and only trade 1,000 shares.

And when you're working in a corporate situation like that with other traders, that's often a hard thing to do, but that's exactly what they needed to do. And by the way, and that's why they tapped the risk manager and firms to do that. top, top traders just go back to basic levels.

Just kind of get your groove back, get your mojo, find out what it is. And maybe it's just, again, randomness, but is it randomness or is it the markets or is it the trader? And finding out at a low level is usually the optimal risk strategy.

Usually it's not just, we encourage that for individual traders, but also it's in usually a lot of prop firms, corporate charters to do that with their traders. I suggest to people that, I mean, look at it this way. Paper trading, okay?

A lot of people who teach trading say that, you know, there's no point in someone paper trading because there's oftentimes a huge difference between the results they'll experience paper trading and what they'll experience when they're real money on the line. Yeah, because there's no real money on the line. In other words, I'm sure there are probably a substantial number of viewers out there who can make consistent money, consistent money. money, following their methodology of paper trading, and then they start doing real trading, and everything changes, okay? Well, and so a lot of teachers have said, well, there's no point in paper trading because, you know, there's no correlation between the results.

Well, that's not really true because what paper trading can do for people is very beneficial. One, it's a graphic demonstration. demonstration, graphic demonstration of the gap that exists in terms of mental skills that they need to acquire. In other words, it's a good way to familiarize yourself with your trading platform. It's a good way to really get confident with your methodology, but more so, it is a graphic representation of the mental skills that you don't have, that you don't have.

That's an interesting concept. Love it. So in other words, how does someone convince themselves that they need those mental skills?

Look at your paper trading in relationship to your real trading. Now, if there's, and a lot of this, even if people have learned to think in probabilities, which is what we've been talking about pretty much this whole time, even if people learn to think in probabilities, it doesn't mean that they can really still accept the loss. Right.

Because, Because the way our minds think, in other words, if I have to take a loss on this trade, it could have the tendency to tap me into all the accumulative kind of negative pain of every time I've had to take a loss in my life. And it just doesn't mean in trading. It could mean pets or people and that sort of thing, or jobs.

And so because our minds have these tendencies to associate, it can make it difficult to accept the loss. So a lot of times what people would have to do, and they also would find difficult to do because a lot of times people get into trading because they want to impress their friends or their family like I'm a trader. But what they might have to do is that when they graduate from paper trading, they might just, you know, the amount of risk tolerance I have might only be just 10 shares. and risking a buck on those 10 shares. And you think, well, what's the point of that?

Well, the point of that is that, you know, when you can trade those 10 shares flawlessly based on whatever your methodology says and do it without any fear or-Because you really make those trades in the paper. I mean, you made those trades in the paper. Then you can go to 20 shares and see how that feels. Then you go to 30 and gradually work your way up. And people aren't willing to gradually work their way up.

This is a concept that we-I mean, and this is, we talk about our graduation plan, which started out small. And we get sometimes criticized, particularly in our scalping methodologies, where like, you know, make $20 a day. And, you know, we see the trolls like, oh, I- stupid to make $20 a day.

I can make a thousand if I, you know, take bigger risks or something, but It's good to see he's sort of embracing the methodology. And he even hints, it even talks about, he mentions the word graduation, like graduating higher and higher, getting one toe in that water one at a time. Love it.

And I'm saying this, and obviously it can't be done without that, but have you found that predominantly? out there, you know, in the people you've taught over the years, have people had to experience a high level of trauma before they can actually make the change? Or can someone just in normal course of every day with a little bit of dedication, actually, I'm not trying to be rhetorical.

I really want a serious answer because there's people out there right now that I'm sure are thinking the same thing. Do I have to lose my whole account? Does this have to happen for me to make it? You're in pain right now, are you, Jared? I'm good.

I've been out of the market. You mean like the gutter principle? Yeah.

Is that what you're referring to? The gutter principle. The gutter principle. In other words, how much in the gutter do you have to be before you're willing to say, I'll do anything? As a matter of fact, you get this kind of bring something up is that when I was, when I was actively coaching, um, uh, my, my, coaching clientele basically fell into two broad categories one was with traders who were already successful who were already consistent and what they wanted were you know they wanted fine-tuning okay they want to creative ways of fine-tuning fine-tuning themselves so that they could actually increase their you know increase the amount of money that they make over over a year whatever and then you had the other group was was was there literally in the emotional gutter okay they're so exasperated they're so frustrated because of the potential that they it's so obvious what the potential is and yet there seems to be these these invisible barriers that keep them from getting into that getting into that potential that that they're they come to be to me saying, I'll do anything.

Now, everyone has different tolerances of pain before they get to the point where they say, I'll do anything and mean it and be sincere and mean it. That's the whole thing. They got to mean it. Yeah. I mean, that's basically just explaining my career, but yeah.

And you get that, like, I just want to do it. I'll work hard. I'll work hard. And it's not really about working hard. It's about understanding these concepts and learning them and understand that, you know, the psychology behind it.

And, uh, you know just executing a plan again he says with flawlessness well flawlessness is 100 compliance but you can get away with you know 85 90 95 and still be successful with a strategy with that so let's see if he wraps up this segment here Mark, a couple of minutes to go. In this arena, is there anything, any message you can give to our traders that, or any final thoughts, maybe some mantra or something? No, just basically, just to kind of sum up what we've been talking about, that if consistent results are your objective, you know then you're going to have to learn how to think like a professional trader because that's what they do they make consistent results that's why that's why they're pros that's why people give them their money to manage that's why they have jobs that where they actually trade for a living because if they didn't make consistent results they wouldn't keep their jobs and so to do that you have to you have to you have to learn to change the way you think about trading in a way where it doesn't cause you to have this potential to think that you're going to be disappointed or betrayed or put you into a state of emotional pain.

It's like getting that carefree state of mind. And once you get to that, once you shift your perspective, everything changes. It's not about being right or wrong.

And when you really understand that, and then you go through the process of learning how to accept the risk of losing, then everything about your trading will change. I mean, a little end on there. I mean, what a wrap up. Yeah, that's it.

I mean, it's not easy, I know, for developing traders, but that's what he's really describing. I mean. It's trading in the zone. When you're at that level, it's trading in the zone, being consistent.

You have a strategy with a positive edge. You're executing with compliance, and you're just consistent. That equity curve is consistent over a series of trades. That means you're going to have drawdowns. The best traders do.

I'm so glad that there's another hour, actually, to this, but I think I want to end it here and maybe a little tease if you want to see the other hour. I think he has some pretty good he takes Q&A, so I'm curious to see what that is. But we'll leave it here.

I hope he got some nuggets out of this. It's really reinforced. This is like the best thing I've done, you know, on a Friday morning in some time.

So Mark Douglas, thank you for all that you have done. You're gone too soon. We miss you.

And boy, but you left such a legacy of, you know, inspiration and also just like core psychological frameworks. That's really without him in those books, I don't know where I'd be today. So thank you again. Put your comments below.

What were some of the key... points that you resonated with, which ones you're struggling with. And maybe this is the first step in a journey to focus on the simplicity of the concepts of trading a zone about randomness and things like that. Maybe some of the individual trade talk will go away and we can move forward and just get more really cool traders in our world and community. So have a great one.

Enjoy. And we'll see you next time. Thank you again, Mark. Douglas.

Transcript for:Insights from Mark Douglas on Trading

Transcript for:
Insights from Mark Douglas on Trading