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​The Mindful Trader Newsletter​
​Issue #13 - July 15, 2023​
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Let's understand who Mark Douglas is.
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​Mark Douglas was a trader, investor, and the author of several trading books. He was famous for popularizing the idea of “trading psychology.” He spent his career coaching traders on how to improve their performance.

Mark Douglas documented most of his trading methods in his knowledge-packed books. He became popular with publishing his famous book Trading in the Zone, released in 2000.
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I hardly read any books on Trading Psychology. However, I used to listen to an Audiobook of "Trading In the Zone" summary in the initial stages of my trading career.
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The insights gained from the book were fantastic; even though I could not connect to every point he mentioned in the book then, over time, I could connect the dots.
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Most traders make the same type of mistakes in trading, especially psychological mistakes, and they must go through that hard learning phase market teaches.
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However, only a few traders will be able to face all those challenges and come out of it to become better traders; others either quit or keep blaming the markets.
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In this newsletter, I will share key trading psychology hacks shared by Douglas. There are many, but here I'll be sharing the ones that are most important and also helped me personally.

According to him, overcoming fear and recklessness can ensure one’s success in the market. He believed fear could be a barrier stopping traders from making successful strides and preventing them from learning or trying something new.
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In one of his famous quotes from the Trading Zone, he noted the following:
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“If there is such a thing as a secret to the nature of trading, this is it: At the very core of one’s ability
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1) to trade without fear or overconfidence,
2) perceive what the market is offering from its perspective,
3) stay completely focused on the ‘now moment opportunity flow’ and
4) spontaneously enter the ‘zone,’ it is a strong, virtually unshakeable belief in an uncertain outcome with an edge in your favour.”​
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My Personal Experience - After 6 to 8 months into the trading, I almost blew up the capital 2 times and lost the confidence to start again.
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My major mistakes were not following the right position size and not sticking to the strategies for enough time.
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So to be able to trade fearlessly means the first step is to set right your risk per trade and per day, have decent capital and then follow the right position size.​

Mark Douglas argues that traders should try to close the “reality gap.”

According to Douglas, “There is a huge gap between what is possible from the market’s perspective, which is virtually anything, and what is possible from the trader’s perspective.”

Traders’ expectations regarding what they think is possible to take out of the markets are limited. The opportunities, however, are abundant.
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​My Personal Experience - Markets are very unpredictable; whenever I feel that markets might fall, it used to go bullish and vice versa, I take decisions from my limited experience, and it can go wrong.

So never be too confident about anything to the extent that you cannot accept the reality.

According to Douglas, the ability to remain positively focused on the trading method and not worry about the potential consequences of failure were essential.

Douglas says that hesitation, fear, or reservation could make one fail even if their strategy had a high probability of success. Thus, confidence, discipline, and focus were what one needed to make it in trading.

Because of the randomness of the outcome of each trade, thinking in probabilities can release you from the mental trauma that follows a losing trade.

Thus, the way to succeed is to focus on the overall performance in a series of trades instead of the result of a specific trade.
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​My Personal Experience - You neither need an 80% win rate strategy or some magic indicator to be successful. A simple 60% win rate and basic risk management of losing less and winning more on average can make you a better, profitable trader.
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It's just a game of probabilities; keep aside the emotional factors.

Douglas advises that thinking too much about whether you are right or wrong about a trade won’t help you succeed.

When you stop thinking about this, the market won’t disappoint you. Try not to avoid the pain of losing or fantasizing about winning. This can affect your purpose as a trader.

My Personal Experience - It takes a long time to accept that you can be wrong and markets can be right, and learn not to get EGO into the picture.
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When you trade with Ego, you always want to win and never be ready to accept when you go wrong.
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As a trader, we are here to make money and not to prove that we are right.
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If you want to read how EGO can affect your trading and how to manage that, read my 1st newsletter here.​

On a demo account, traders don’t think about being right or wrong because they know they can’t lose money. Hence, they only focus on applying their methods to build their trading account over time.

According to Douglas, this thought process should also be followed when a trader switches to a real account to maintain consistent trading results.
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​You can read my detailed newsletter on "Paper Trading" here.​

There is no guarantee you will make money in the markets. However, Douglas believed that putting the odds of success in your favour is a way of developing a high-probability trading edge.

A trading edge means a better chance of going through a series of positive gains. Combining this trading edge with the proper mental skills can increase the odds of making consistent returns.

My Personal Experience - Trading edge means you need a better win ratio or a better risk-reward ratio. If you manage to have both, you have a very good trading edge.
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Maintain a journal, identify which one you are lagging, and then try to improve that.
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You can download our Free Trading journal here and easily track all your trades.

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That's it for this week; ill see you in the next newsletter.

I hope these newsletters are helping you to improve your trading mindset. Feel free to reply to this email to help me understand how these newsletters are helping you :)
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Also, when you are ready to level up your trading skills and learn more advanced trading concepts & strategies at your own pace, you can always check out these.​
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Until next time,
~ Arun Bau

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Lanco Hills, Hyderabad, Telengana 500086
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