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tradinginthezone.com

Learning how to redefine your trading activities in a way that allows you to completely accept the risk is the key to thinking like a successful trader.
🔑💰⇒Learning to accept the risk is a trading skill; the most important skill you can learn.

The best traders aren’t afraid.

When you are fearful, no other possibilities exist. You can’t perceive other possibilities or act on them properly, even if you did manage to perceive them, because fear is immobilizing.

💰🔑Understanding and controlling your perception of market information is important only to the extent that you want to achieve consistent results.

💡Market analysis is not the path to consistent results.

You need to learn how to adjust your attitudes and beliefs about trading in such a way that you can trade without the slightest bit of fear, but at the same time keep a framework in place that does not allow you to become reckless.

🔑Growth implies expansion, learning, and creating a new way of expressing yourself.

The best traders think in a number of unique ways. They have acquired a mental structure that allows them to trade without fear, and, at the same time, keeps them from becoming reckless and committing fear-based errors.
This mindset has a number of components, but the bottom line is that successful traders have virtually eliminated the effects of fear and recklessness from their trading. These two fundamental characteristics allow them to achieve consistent results.

Eliminating fear is only half the equation. The other half is the need to develop restraint. Excellent traders have learned that it is essential to have internal discipline or a mental mechanism to counteract the negative effects of euphoria or the overconfidence that comes from a string of winning trades.
⇒For a trader, winning is extremely dangerous if you haven’t learned how to monitor and control yourself.

💰Attitude produces better overall results than analysis or technique.
⇒Of course, the ideal situation is to have both, but you really don’t need both, because if you have the right attitude, the right mindset, then everything else about trading will be relatively easy, even simple, and certainly a lot more fun.

💡Interestingly, most traders are closer to the way they need to think when they first begin trading than at any other time in their careers.
→Many people begin trading with a very unrealistic concept of the inherent dangers involved. This is particularly true if their first trade is a winner. Then they go into the second trade with little or no fear. If that trade is a winner, they go into the next trade with even less concern.
→Each subsequent win convinces them that there is nothing to fear and that trading is the easiest possible way to make money.
→This lack of fear translates into a carefree state of mind, similar to the state of mind many great athletes describe as a “zone.” If you’ve ever had the occasion to experience the zone in some sport, then you know it is a state of mind in which there is absolutely no fear and you act and react instinctively. You don’t weigh alternatives or consider consequences or second-guess yourself. You are in the moment and “just doing it.” Whatever you do turns out to be exactly what needed to be done.
→Most athletes never reach this level of play, because they never get past the fear of making a mistake. Athletes who reach the point where there is absolutely no fear of the consequences of screwing up will usually, and quite spontaneously, enter into “the zone.”
→A psychological zone is not a condition you can will yourself into, the way you can will yourself into a feat of endurance. It is a state of mind you find yourself in that is inherently creative, and usually if you start thinking about your actions at a rational or conscious level, you pop right out of it.
→Even though you cannot force or will yourself into a zone, you can set up the kind of mental conditions that are most conducive to experiencing “the zone,” by developing a positive winning attitude. I define a positive winning attitude as expecting a positive result from your efforts, with an acceptance that whatever results you get are a perfect reflection of your level of development and what you need to learn to do better.
⇒That’s what the great athletes have: a winning attitude that allows them to easily move beyond their mistakes and keep going.
⇔Others get bogged down in negative self-criticism, regret, and self-pity. Not many people ever develop a positive winning attitude. The curious anomaly of trading is that, if you start with a winning trade, you will automatically experience the kind of carefree mindset that is a by-product of a winning attitude, without having developed the attitude itself.

Putting on a few winning trades does not mean you have become a trader, but that’s the way it feels, because it taps us into a state of mind that only the most accomplished people experience on a consistent basis. The fact is, you don’t need the slightest bit of skill to put on a winning trade, and if it’s possible to put on one winning trade without the slightest big of skills, it is certainly possible to put on another and another.

In most sports or other competitive activities, participants must develop physical skills as well as mental skills in the form of strategies. If opponents are not evenly matched in the skills department, the one with superior skills usually (but not always) wins. When an underdog beats a superior opponent, what’s the determining factor? When two opponents are evenly matched, what’s the factor that tips the balance one way or the other? In both cases, the answer is attitude.
→What makes trading so fascinating and, at the same time, difficult to learn is that you really don’t need lots of skills; you just need a genuine winning attitude.
→Experiencing a few or more winning trades can make you feel like a winner, and that feeling is what sustains the winning streak.
→This is why it is possible for a novice trader to put on a string of winning trades.
→The novice trader experiences the feeling of a winning attitude because he’s not afraid. But that doesn’t mean he has a winning attitude; it only means he hasn’t experienced any pain from his trading activities to make him afraid.⇒It’s a fundamental shift in attitude that accounts for their success.

We can safely assume that after a loss, our novice trader will be in a state of emotional pain. As a result, his trading will take on a whole new quality. He’ll definitely lose that carefree state of mind, but more important, he will feel that the market did this to him: The market caused him to feel the pain he is experiencing; the market took away his winning feeling by subjecting him to a loss. Notice how our trader is blaming the markets for losing or what he didn’t get. Notice, too, how natural it is to feel the way he does.
Think about how many times in our lives, especially as children, we were doing something we really enjoyed, like playing with a toy or with our friends, and someone with more power and authority forced us to stop what we were doing and do something we didn’t want to do. All of us have lost things, had things taken away from us, been denied things we wanted or believed we deserved, been prevented from continuing an activity we were in the middle of, or been blocked from pursuing an idea we were passionate about.
The point is that in many of these situations, we did not need to take personal responsibility for what happened to us or for the pain we experienced, because we were powerless to do anything about it. We didn’t choose to be forced out of a state of joy and happiness, into a state of emotional pain. The decision was out of our hands, against our will, and usually quite abrupt. Even though we may have been told we were responsible for what was happening to us, we may not have believed it or understood what it meant. What’s tangible, and what we can most easily relate to, is that we were having fun, and someone or something took us out of that fun and into pain. It wasn’t our choice. The cause of our pain came to us from the outside; therefore, whatever force acted upon us in that moment was to blame. We learned not only that feeling good can instantly be replaced with feeling bad through no fault of our own; we also learned about betrayal. We felt betrayed because many of these situations were completely unexpected or unanticipated, meaning, we were unprepared for how some people in our lives had the potential to behave. If their behavior caused us to flip into a state of emotional pain, then we quite naturally would have felt betrayed.

🔥Many people are born to immature and unreasonable parents, or encounter emotionally disturbed teachers, coaches, and employees who subconsciously or intentionally inflict their personal problems on anyone they perceive as having less power.
What’s even worse is many of the people who have a tendency toward victimizing others are also clever enough to do it in a way that makes their victims believe they caused their own pain. In any case, whether our painful experiences are the result of an act of love or intentionally inflicted is something each of us will have to determine for ourselves.
⇒The bottom line is that, as adults when we get into a trading mode, we don’t realize how natural it is to associate the instantaneous shift from joy to pain that we experienced so often as children with the same instantaneous shift from joy to pain that occurs when we trade.
⇒The implications are that if we haven’t learned to accept the inherent risks of trading and don’t know how to guard against making these natural connections between our past and the present, we will end up blaming the market for our results instead of taking responsibility for them. PN: past unresolved trauma
⇒Even though most people who trade consider themselves responsible adults, only the very best traders have reached a point where they can and do accept complete responsibility for the outcome of any particular trade.

The reality is, every trader who participates in the markets does so for his own benefit. The only way one trader loses, whether the loss is in actual dollars as in a futures trade, or lost opportunity as in a stock trade.

When you look at your relationship with the market from this perspective, you could say that your purpose is to extract money from the markets, but, by the same token, the market’s sole purpose is to extract money or opportunity from you. If the market is a group of people interacting to extract money from one another, then what is the market’s responsibility to the individual trader? It has no responsibility other than to follow the rules it has established to facilitate this activity.
⇒The point is, if you have ever found yourself blaming the market or feeling betrayed, then you have not given enough consideration to the implications of what it means to play a zero-sum game.

💰🔑💡🔥💎☕Taking responsibility means acknowledging and accepting, at the deepest part of your identity, that you, not the market, are completely responsible for your success or failure as a trader.

Do you feel responsible for fulfilling some other trader’s expectations, hopes, dreams, and desires? Of course you don’t. It sounds absurd to even ask.
However, if you ever find yourself blaming the market and feeling betrayed, that is essentially what you are doing. You are expecting the collective actions of everyone participating in the market to make the market act in a way that gives you what you want.
🔑🔥You have to learn for yourself how to get what you want out of the markets.
The first major step in this learning process is taking complete and absolute responsibility.
Taking responsibility means believing that all of your outcomes are self-generated; that your results are based on your interpretations of market information, the decisions you make and the actions you take as a result.
⇒Taking anything less than complete responsibility sets up two major psychological obstacles that will block your success. First, you will establish an adversarial relationship with the market that takes you out of the constant flow of opportunities. Second, you will mislead yourself into believing that your trading problems and lack of success can be rectified through market analysis.

The way to take maximum advantage of a situation where you are being offered unlimited opportunities to do something for yourself is to get into the flow. The market does have a flow. It is often erratic, especially in the shorter time frames, but it does display symmetrical patterns that repeat themselves over and over again. Obviously, it’s a contradiction to flow with something you are against. 🔑If you want to start sensing the flow of the market, your mind has to be free of fear, anger, regret, betrayal, despair, and disappointment. You won’t have a reason to experience these negative emotions when you assume absolute responsibility.

For traders, the only way to extract revenge is to conquer the market, and the only way to conquer the market is through market knowledge, or so they think. In other words, the underlying reason for why the novice trader is learning about the market is to overcome the market, to prove something to it and himself, and most important, to prevent the market from hurting him again.
⇒He is not learning the market simply as a means to give himself a systematic way of winning, but rather as a way to either avoid pain or prove something that has absolutely nothing to do with looking at the market from an objective perspective.
→In effect what he has done is set up an irreconcilable dilemma. He is learning how to recognize and understand the market’s collective behavior patterns, and that’s good. It even feels good. He’s inspired because he assumes he’s learning about the market in order to become a winner. As a result, he will typically go on a knowledge quest, learning about trend lines, chart patterns, support and resistance, candlesticks, market profiles, point and line charts, Elliott waves, Fibonacci retracements, oscillators, relative strength, stochastics, and many more technical tools too numerous to mention. Curiously, even though his knowledge has increased, he now finds that he’s developed problems executing his trades. He hesitates, second-guesses himself, or doesn’t put on a trade at all, in spite of any number of clear signals to do so. It’s all frustrating, even maddening, because what’s happened doesn’t make sense. He did what he was supposed to do—he learned—only to find that the more he learned, the less he took advantage of. He would never believe that he did anything wrong by devoting himself to learning; he simply did it for the wrong reasons.
→The dilemma is that our minds are wired to avoid both physical and emotional pain, and learning about the markets will not compensate for the negative effects our pain-avoidance mechanisms have on our trading.
→Everybody understands the nature of avoiding physical pain. Accidentally set your hand on a hot burner, and your hand moves away from the heat automatically; it’s an instinctive reaction. However, when it comes to avoiding emotional pain and the negative consequences it creates, especially for traders, very few people understand the dynamics. It’s absolutely essential to your development that you understand these negative effects and learn how to take conscious control in a way that helps you fulfill your goals.
→He’s no longer focused on just winning, but rather on how he can avoid pain by preventing the market from hurting him again. This kind of negative perspective isn’t any different from the tennis player or golfer who is focused on trying not to make a mistake, the more he tries not to make a mistake, the more mistakes he makes.
→Learning more and more about the markets only to avoid pain will compound his problems because the more he learns, the more he will naturally expect from the markets, making it all the more painful when the markets don’t do their part.

💰🔑💡🔥💎☕The worst consequence of not taking responsibility is that it keeps you in a cycle of pain and dissatisfaction.
→If you’re not responsible for your results, then you can assume there’s nothing for you to learn, and you can stay exactly as you are. You won’t grow and you won’t change. As a result, you will perceive events in exactly the same way, and therefore respond to them in the same way, and get the same dissatisfying results.
→Or, you might also assume the solution to your problems is to gain more market knowledge. It is always virtuous to learn, but in this case if you don’t take responsibility for your attitudes and perspective, then you’re learning something valuable for the wrong reasons—reasons that will cause you to use what you’ve learned in inappropriate ways. Without realizing it, you’ll be using your knowledge to avoid the responsibility of taking risks. In the process, you end up creating the very things you are trying to avoid, keeping you in a cycle of pain and dissatisfaction.

Winning attitude: a positive expectation of your efforts with an acceptance that whatever results you get are a perfect reflection of your level of development and what you need to learn to do better.
→If you shift the blame in order to block the painful feelings that result from beating yourself up, all you’ve done is put an infected Band-Aid on the wound. You may think you have solved the problem, but the problem is only going to resurface later, worse than before. It has to, simply because you haven’t learned anything that would cause you to make the kind of interpretations that would result in a more satisfying experience.

🔑💡🔥💎You are not responsible for what the market does or doesn’t do, but you are responsible for everything else that results from your trading activities. You are responsible for what you have learned, as well as for everything you haven’t learned yet that’s waiting to be discovered by you.
The most efficient path to discovering what you need to be successful is to develop a winning attitude, because it’s an inherently creative perspective. Not only does a winning attitude open you up to what you need to learn; it also produces the kind of mind-set that is most conducive to discovering something no one else has experienced.
💰🔑⇒Developing a winning attitude is the key to your success.
⇔Understanding the markets will give you the edge you need to create some winning trades, but your edge won’t make you a consistent winner if you don’t have a winning attitude.

If you want to change your experience of the markets from fearful to confident, if you want to change your results from an erratic equity curve to a steadily rising one, the first step is to embrace the responsibility and stop expecting the market to give you anything or do anything for you. If you resolve from this point forward to do it all yourself, the market can no longer be your opponent. If you stop fighting the market, which in effect means you stop fighting yourself, you’ll be amazed at how quickly you will recognize exactly what you need to learn, and how quickly you will learn it. Taking responsibility is the cornerstone of a winning attitude.

Consistency: A state of mind
What separates the best traders from everyone else is not what they do or when they do it, but rather how they think about what they do and how they’re thinking when they do it.
If your goal is to trade like a professional and be a consistent winner, then you must start from the premise that the solutions are in your mind and not in the market.

The answers are all in the way you think about it. The irony is that trading can be as much fun and as effortless as your experience of it has been on occasion; but experiencing these qualities consistently is a function of your perspective, your beliefs, your attitudes, or your mindset.

Traders who are consistently successful are consistent as a natural expression of who they are. They don’t have to try to be consistent; they are consistent. This may seem like an abstract distinction, but it is vitally important that you understand the difference. Being consistent is not something you can try to be, because the very act of trying will negate your intent by mentally taking you out of the opportunity flow, making it less likely that you will win and more likely you will lose.
Your very best trades were easy and effortless. You didn’t have to try to make them easy; they were easy. There was no struggle. You saw exactly what you needed to see, and you acted on what you saw. You were in the moment, a part of the opportunity flow. When you’re in the flow, you don’t have to try, because everything you know about the market is available to you.
⇔On the other hand, having to try indicates that there is some degree of resistance or struggle. Otherwise, you would just be doing it and not have to try to be doing it. It also indicates that you’re trying to get what you want from the market.
While it seems natural to think this way, it’s a perspective fraught with difficulties.
💰🔑💡💎☕The best traders stay in the flow because they don’t try to get anything from the market; they simply make themselves available so they can take advantage of whatever the market is offering at any given moment. There’s a huge difference between the two perspectives.

Our minds are wired to avoid both physical and emotional pain.
If you trade from the perspective of trying to get what you want or what you expect from the markets, what happens when the market doesn’t behave in a way that will fulfill your expectations? Your mental defense mechanisms kick in to compensate for the difference between what you want and what you’re not getting, so that you don’t experience any emotional pain. Our minds are designed to automatically block threatening information or find a way to obscure that information, in order to shield us from the emotional discomfort we naturally feel when we don’t get what we want. You won’t realize it in the moment, but you will pick and choose information that is consistent with what you expect, so that you can maintain a pain-free state of mind.
However, in the process of trying to maintain a pain-free state of mind, you also take yourself out of the opportunity flow and enter the realm of the “could have,” the “should have,” the “would have,” and the “if only.” Everything that you could have, should have, or would have recognized in the moment appeared invisible, then all becomes painfully evident after the fact, after the opportunity is long gone.
To be consistent, you have to learn to think about trading in such a way that you’re no longer susceptible to conscious or subconscious mental processes that cause you to obscure, block, or pick and choose information on the basis of what will make you happy, give you what you want, or avoid pain.
💰🔑💡💎⇒The threat of pain generates fear, and fear is the source of 95 percent of the errors you are likely to make.

The reality is that it’s all taking place inside your mind. The market doesn’t perceive the information it makes available; you do. If there’s a struggle, it is you who are struggling against your own internal resistance, conflicts, and fears.
How can I think about trading in such a way that I’m no longer afraid and, therefore, no longer susceptible to the mental processes that cause me to block, obscure, or pick and choose information? 💰🔑The answer is: Learn to accept the risk.

Accepting the risk means accepting the consequences of your trades without emotional discomfort or fear.

If you can learn to create a state of mind that is not affected by the market’s behavior, the struggle will cease to exist. When the internal struggle ends, everything becomes easy. At that point, you can take full advantage of all your skills, analytical or otherwise, to eventually realize your potential as a trader.
⇔Needing courage, nerves of steel, or self-control would imply an internal conflict where one force is being used to counteract the effects of another. Any degree of struggle, trying, or fear associated with trading will take you out of the moment and flow, and therefore, diminish your results.

I knew someone who was morbidly afraid of snakes. Does this mean that he is doomed to be afraid of snakes for the rest of his life? Only if he wants to be. It’s really a matter of willingness. It’s certainly possible to neutralize his fear, but he will have to work at it, and working at anything requires sufficient motivation. Many of us have what we know to be irrational fears and simply choose to live with the contradiction because we don’t want to go through the emotional work that is necessary to overcome the fear.
⇒There are easier, infinitely more satisfying ways of getting what you want from the market, but first you have to be willing to “get your mind right.”

The Dynamics of Perception
One of the primary objectives of this book is to teach you how to take the threat of pain out of market information.

It’s your own mental framework that determines how you perceive the information, how you feel and as a result, whether or not you are in the most conducive state of mind to spontaneously enter the flow and take advantage of whatever the market is offering.

If your goal is to be able to trade like the professionals, you must be able to see the market from an objective perspective, without distortion. You must be able to act without resistance or hesitation, but with the appropriate amount of positive restraint to counteract the negative effects of overconfidence or euphoria.
⇒In essence, your objective is to be able to create a unique state of mind, a trader’s mentality. When you’ve accomplished this, everything else about your success as a trader will fall into place.

If the memories, distinctions, and beliefs we’ve acquired as a result of our encounters with the external environment represent what we’ve learned about that environment and how it works; and if these memories, distinctions, and beliefs exist in our mental environment as energy; and if energy doesn’t take up any space; then it also could be said that we have an unlimited capacity for learning. →There is absolutely nothing to indicate that we don’t have an unlimited capacity to learn.
⇒However, we must be careful not to equate storage capacity with learning capacity.

Everyone has heard of the expression “People see what they want to see.” I would put it a little differently: People see what they’ve learned to see, everything else is invisible until they learn how to counteract the energy that blocks their awareness of whatever is unlearned and waiting to be discovered.

💎☕Our minds have an inherent design characteristic that causes us to associate and link anything that exists in the external environment that is similar in quality, characteristics, properties, or traits to anything that already exists in our mental environment as a memory or distinction.

One of your basic objectives as a trader is to perceive the opportunities available, not the threat of pain. To learn how to stay focused on the opportunities, you need to know and understand in no uncertain terms the source of the threat. It’s not the market. The market generates information about its potential to move from a neutral perspective. At the same time, it provides you(the observer) with an unending stream of opportunities to do something on your own behalf.
If what you perceive at any given moment causes you to feel fear, ask yourself this question: ☕Is the information inherently threatening, or are you simply experiencing the effect of your own state of mind reflected back to you (as in the above illustration)?

Many of the mental patterns that cause traders to lose and make errors are so self-evident and deeply ingrained that it would never occur to us that the reason we aren’t consistently successful is because of the way we think.
💰🔑💡⇒Understanding, becoming consciously aware of, and then learning how to circumvent the mind’s natural propensity to associate is a big part of achieving that consistency.
Developing and maintaining a state of mind that perceives the opportunity flow of the market, without the threat of pain or the problems caused by overconfidence, will require that you take conscious control of that association process.

The Market’s Perspective
For the most part, a typical trader’s perception of the risk in any given trading situation is a function of the outcome of his recent two or three trades.
⇔The best traders, on the other hand, are not impacted(either too positively or too negatively) by the outcomes of their last or even last several trades.

If there is such a thing as a secret to the nature of trading, this is it:
At the core of one’s ability

The best traders have evolved to the point where they believe, without a shred of doubt or internal conflict, that “anything can happen“.

It isn’t difficult to understand why so few people make it as traders.
⇒They simply don’t do the mental work necessary to reconcile the many conflicts that exist between what they’ve already learned and believe, and how that learning contradicts and acts as a source of resistance to implementing the various principles of successful trading.

💰💎Not predefining your risk, not cutting your losses, or not systematically taking profits are three of the most common and usually the most costly trading errors you can make.

If the trader believes that anything is possible, then there’s nothing for his mind to avoid. Because anything includes everything, this belief will act as an expansive force on his perception of the market that will allow him to perceive information that might otherwise have been invisible to him.
→In essence, he will be making himself available(opening his mind) to perceive more of the possibilities that exist from the market’s perspective.
→Most important, by establishing a belief that anything can happen, he will be training his mind to think in probabilities. ⇒This is by far the most essential as well as the most difficult principle for people to grasp and to effectively integrate into their mental systems.

Exactly what does it mean to think in probabilities, and why is it so essential to one’s consistent success as a trader?
⇒Events that have probable outcomes can produce consistent results, if you can get the odds in your favor and there is a large enough sample size.
The best traders treat trading like a numbers game, similar to the way in which casinos and professional gamblers approach gambling.

💰The best traders and professional gamblers alike don’t have to know what’s going to happen next, they don’t place any special significance, emotional or otherwise, on each individual hand, spin of the wheel, or roll of the dice.
⇒Since all trades have an uncertain outcome, then like gambling, each trade has to be statistically independent of the next trade, the last trade, or any trades in the future, even though the trader may use the same set of known variables to identify his edge for each trade.

Casino owners don’t try to predict or know in advance the outcome of each individual event. Aside from the fact that it would be extremely difficult, given all the unknown variables operating in each game, it isn’t necessary to create consistent results. Casino operators have learned that all they have to do is keep the odds in their favor and have a large enough sample size of events so that their edge have ample opportunity to work.

☕For any particular pattern to be exactly the same now as it was in some previous moment would require that every trader who participated in that previous moment be present. What’s more, each of them would also have to interact with one another in exactly the same way over some period of time to produce the exact same outcome to whatever pattern was being observed. The odds of that happening are nonexistent.
⇒If the consistency of the group of traders who are creating the pattern “now” is different by even one person from the group that created the pattern in the past, then the outcome of the current pattern has the potential to be different from the past pattern.

🔑Thinking in probabilities can be difficult to master, because our minds don’t naturally process information in this manner.
→Unless we train our minds to perceive the uniqueness of each moment, that uniqueness will automatically be filtered out of our perception.
→There is some degree of sophistication to thinking in probabilities.

When you’ve trained your mind to think in probabilities, it means you have fully accepted all the possibilities and you always do something to take the unknown forces into account.
Thinking this way is virtually impossible unless you’ve done the mental work necessary to “let go” of the need to know what is going to happen next or the need to be right on each trade.
💰🔑💡🔥💎☕⇒In fact, the degree by which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader.
Traders who have learned to think in probabilities are confident of their overall success, because they commit themselves to taking every trade that conforms to their definition of an edge.

They have learned, usually quite painfully, that they don’t know in advance which edges are going to work and which ones aren’t.
They have stopped trying to predict outcomes. They have found that by taking every edge, they correspondingly increase their sample size of trades, which in turn gives whatever edge they use ample opportunity to play itself out in their favor, just like the casinos.

Be absolutely certain that certainty doesn’t exist.

When you achieve complete acceptance of the certainty of each edge and the uniqueness of each moment, your frustration with trading will end.

💰🔑💎Not defining the risk before getting into a trade is by far the most common of all trading errors, and starts the whole process of trading from an inappropriate perspective.
In light of the fact that anything can happen, wouldn’t it make perfect sense to decide before executing a trade what the market has to look, sound, or feel like to tell you your edge isn’t working?

For the traders who have learned to think in probabilities, there is no dilemma. Predefining the risk doesn’t pose a problem for these traders because they don’t trade from a right or wrong perspective.

🔑☕We have to be careful about what we project out into the future, because nothing else has the potential to create more unhappiness and emotional misery than an unfulfilled expectation.

As traders, we can’t afford to let our pain-avoidance mechanisms cut us off from what the market is communicating to us about what is available in the way of the next opportunity to get in, get out, add to, or subtract from a position, just because it’s doing something that we don’t want or expect.

In what way does a trader have to learn how to be rigid and flexible at the same time? The answer is: 💰🔑🔥💎We have to be rigid in our rules and flexible in our expectations.
⇒We need to be rigid in our rules so that we gain a sense of self-trust that can, and will always, protect us in an environment that has few, if any, boundaries.
⇒We need to be flexible in our expectations so we can perceive, with the greatest degree of clarity and objectivity, what the market is communicating to us from its perspective.

To eliminate the emotional risk of trading, you have to neutralize your expectations about what the market will or will not do at any given moment or in any given situation.

A probabilistic mind-set pertaining to trading consists of 5 fundamental truths.

🔑☕Keep in mind that your potential to experience emotional pain comes from the way you define and interpret the information you’re exposed to.

The idea is to create a carefree state of mind that completely accepts the fact that there are always unknown forces operating in the market.
⇒When you make these truths a fully functional part of your belief system, the rational part of your mind will defend these truths in the same way it defends any other belief you hold about the nature of trading.

If you really believed in an uncertain outcome, would you ever consider putting on a trade without defining your risk in advance?
Would you ever hesitate to cut a loss, if you really believed you didn’t know?
What about trading errors like jumping the gun? How could you anticipate a signal that hasn’t yet manifested itself in the market, if you weren’t convinced that you were going to miss out?
Why would you ever let a winning trade turn into a loser, or not have a systematic way of taking profits, if you weren’t convinced the market was going your way indefinitely?
Why would you hesitate to take a trade or not put it on at all, unless you were convinced that it was a loser when the market was at your original entry point?
Why would you break your money management rules by trading too large a position relative to your equity or emotional tolerance to sustain a loss, if you weren’t positive that you had a sure thing?
Finally, if you really believed in a random distribution between wins and losses, could you ever feel betrayed by the market?
⇒You just can’t expect to be right.

💰🔑💡🔥💎Losses are simply the cost of doing business or the amount of money I need to spend to make myself available for the winning trades.

💰🔑💡🔥💎☕At the most fundamental level, the market is simply a series of up and down tics that form patterns. Technical analysis defines these patterns as edges. Any particular pattern defined as an edge is simply an indication that there is a higher probability that the market will move in one direction over the other.

—What are the Objectives?
Putting on a winning trade or even a series of winning trades requires absolutely no skill.
⇔On the other hand, creating consistent results and being able to keep what we’ve created does require skill.
Making money consistently is a by-product of acquiring and mastering certain mental skills. The degree to which you understand this is the same degree to which you will stop focusing on the money and instead focus on how you can use your trading as a tool to master these skills.

—What Are the Skills?
Consistency is the result of a carefree, objective state of mind, where we are making ourselves available to perceive and act upon whatever the market is offering us (from its perspective) in any given “now moment.”

—What Is a Carefree State of Mind?
Carefree means confident, but not euphoric. When you are in a carefree state of mind, you won’t feel any fear, hesitation, or compulsion to do anything, because you’ve effectively eliminated the potential to define and interpret market information as threatening. To remove the sense of threat, you have to accept the risk completely. When you have accepted the risk, you will be at peace with any outcome. To be at peace with any outcome, you must reconcile anything in your mental environment that conflicts with the five fundamental truths about the market. What’s more, you also have to integrate these truths into your mental system as core beliefs.

—What Is Objectivity?
Objectivity is a state of mind where you have conscious access to everything you have learned about the nature of market movement. In other words, nothing is being blocked or altered by your pain-avoidance mechanisms.

—What Does it Mean to Make Yourself Available?
Making yourself available means trading from the perspective that you have nothing to prove. You aren’t trying to win or to avoid losing. You aren’t trying get your money back or to take revenge on the market. In other words, you come to the market with no agenda other than to let it unfold in any way that it chooses and to be in the best state of mind to recognize and take advantage of the opportunities it makes available to you.

—What Is the “Now Moment”?
Trading in the “now moment” means that there is no potential to associate an opportunity to get into, get out of, add too, or detract from a trade with a past experience that already exists in your mental environment.

💰You don’t need to know what is going to happen next in order to make money.
⇒Because there is a random distribution between wins and losses for any given set of variables that define an edge.
⇒This truth makes trading a probability or numbers game.
When you really believe that trading is simply a probability game, concepts like right and wrong or win and lose no longer have the same significance. As a result, your expectations will be in harmony with the possibilities.

☕Market information is only threatening if you are expecting the market to do something for you.

If you believe that all you need to know is:

☕If each moment is like no other, then there’s nothing at the level of your rational experience that can tell you for sure that you “know” what will happen next. So, why bother?

What separates the best traders from all the rest is that they have trained their minds to believe in the uniqueness of each moment.

If you asked me to distill trading down to its simplest form, I would say that it is a pattern recognition numbers game.

“I am a consistently successful trader.”

💰🔑The first step in the process of creating consistency is to start noticing what you’re thinking, saying, and doing.

If you’re going to become a consistent winner, mistakes can’t exist in the kind of negatively charged context in which they are held by most people.

☕Trading is just a simple game of probabilities(numbers), not much different from pulling the handle of a slot machine.

From a probabilities perspective, this means that instead of being the person playing the slot machine, as a trader, you can be the casino, if:

💰The lowest risk trade with the highest probability of success occurs when you are buying dips(support) in an up-trending market or selling rallies(resistance) in a down-trending market.

💰Ideally, your risk to reward ratio should be at least 1:3.

You can compensate for these subtle changes in the underlying dynamics of market movement and still maintain a consistent approach by trading in sample sizes. Your sample size has to be large enough to give your variables a fair and adequate test, but at the same time small enough so that if their effectiveness diminishes, you can detect it before you lose an inordinate amount of money.
⇒A sample size of at least 20 trades fulfills both of these requirements.

Try not to prejudge how long it will take before you can get through at least one sample size of trades, following your plan without deviation, distracting thoughts, or hesitation to act. It will take as long as it takes.
→If you wanted to be a professional golfer, it wouldn’t be unusual to dedicate yourself to hitting 10,000 or more golf balls until the precise combination of movements in your swing were so ingrained in your muscle memory that you no longer had to think about it consciously.
→When you’re out there hitting those golf balls, you aren’t playing an actual game against someone or winning the big tournament. You do it because you believe that skill acquisition and practice will help you win. Learning to be a consistent winner as a trader isn’t any different.